Thanks to all of you who have commented!
There have been so many changes that a new beta release seems wise. We should have the release today or tomorrow. I will send this to all of you who have commented on the first beta. No problem if you ignore it.
Changes in the second beta:
1) Shelves. Annie ended up making 4 or them: wood (today's shelf), very light grey, medium grey, and very dark grey (almost black).
2) The four "cover shapes" discussed above (portrait, square, with and without respecting aspect ratio). In the end I used .65 for the aspect ratio. There is a little slop in the calculation, in that if pretending that the screen width is 1/2 book wider lets another cover fit, the cover sizes are squished down a bit to make that happen.
3) The "handle line" down the left edge is gone.
4) All views except the main one have the original CC icon on the action bar, and this icon acts as a "back" button.
5) Cover thumbnails are downloaded at max size, avoiding the pixelation and confusion when changing thumbnail sizes. This is automatic for new and small libraries (< 50 books on the device). If there are more than 50 books on the device we leave the setting alone to avoid possible "connect" surprises. In all cases the setting will be changed when you ask to view "medium" or "large" thumbnails anywhere.
6) We attempt to do something reasonable with view position when switching between grid and list views.
7) A host of small changes related to thumbnail positioning and size.
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I am still considering adding control of the "show first letters" preference to the grouping drawer.