I'd definitely try the factory reset then, and when done, add just a few books and see if the slowness is gone. If it's fine, then add your additional books, but I'd strongly suggest keeping it to around 300 books or so. If the slowness starts up again after you add the rest of the books, I'd really suspect a badly formatted book.
I once was obsessed with the idea of having all my ebooks on my readers with me all the time. Then ran into the slowdown and realized how pointless it was to want to keep thousands of books with me, and started to keep only between 250-350 books or so on at a time. When I'm done reading, I delete the book from the device. And with around 300 books to choose from, I always have plenty of content to choose from that will suit my fancy at the moment.
I have all my books in a Calibre library on my PC though, and that's backed up to 4 more drives and the cloud, so I can freely delete from the device without losing anything.
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