I'm using the TeamB version of CM7 on my Nook Tablet. I've got the margins set on the middle setting and the font fairly small. The margins on the left and right are maybe 3/16 inch. If I put it on the minimum margin setting, the margins go to about 1/8 inch.
I'm also using the latest Kindle for Android vs. 188.8.131.52.
Under the "What's New" (in Info) for vs. 3.6.0 it reads "Tablet users: customize your reading experience with new margin and line spacing controls."