I think the flash of increased contrast you're referring to is actually the anti-aliasing delay, but I could be wrong. Anti-aliasing smoothes the edges of fonts and other objects into the background behind them so that they don't look out of place and also so that when the font/object is scaled to smaller sizes it will actually appear more readable. Unfortunately, if the text is already at a smaller size, the anti-aliasing might make the font appear thinner than it is and the anti-aliasing may even bleed into the body of the font/object effectively fading the entire text somewhat. In those cases the larger font sizes should make the text appear darker than in the smaller sizes, but I would certainly like to see some more font rendering settings on the 700. A lot of it can be avoided by optimizing the files for the 700 before putting them on there, but I haven't personally optimized any of my books yet since I just got my reader yesterday.
Would much rather see an official Sony firmware update than a community patch. Hoping Sony had a good enough Christmas that they kick it up a notch and crank out some needed updates for the readers and the library software.