OK, I just did the update on my iPhone, and I see what you mean. I don't keep all my books on my phone, only any that I am currently reading. So I can see the arrow for the books that haven't been downloaded.
I feel rather silly now, but I won't edit my original posts because otherwise this entire thread won't make any sense. (I guess if I'm going to get all hot under the collar about something and start holding forth about it in a public forum, I should be prepared to deal with the consequences.)
The misunderstanding came from my interpreting that bar as a download progress bar rather than a reading progress bar.
My apologies.