too early
I have absolutely no idea how the Kindle exactly works but isn't there also the added cost of a 3G or Wifi connection ? At 4 to 8 cents per download it would still be a pretty big extra cost/paper and enough of a cost to make the whole idea impossible to realise.
Realistically I think only multi-year newspaper subscriptions could ever make it viable economically to 'give away' these devices. You really don't want to start with this only to find another newspaper piggy-backs on your efforts and steals away your customers leaving you with bill of the readers !
You'd also have to consider the fact that if you give away these devices you would also have to support them in some way if they do not manage to get their newspaper on their device. Yet another extra cost.
Not to mention the fact that it probably would take years to produce enough devices , right now e-book readers already are often 'sold-out' and I wouldn't be suprised if the bottleneck is really with the production of the e-Ink screens themselves since all the vendors of ebook readers seem to be "sold out" frequently !
E-ink production seems to still be relatively small-scale and it would take time to scale that up.
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