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I would say I'll like a combination of both actually.
I really like the visual highlighting in the Gen3 as its so much easier then having to enter in a word for dictionary search.
On the other hand, I'll like something like T9 or virtual keyboard input to look up words not in a book on my reader. That would be a killer application, and may also allow easier usage of resources like encyclopaedia's.
As such until the Gen 3 supports something like this, it does limit the utility of the device.
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