Actually the original devices for Mobipocket were PDAs, 160 x 160 pixels. By the time Palm did a 320 x 320 PDA there were already also "smart phones" using Symbian and 320 x 240, with Mobipocket.
My Palm Z22 does do colour, but none of the supported eReader applications seem to have images in them. No cover view either back then.
Apple has caused the cover image to become enormous by insisting on image sizes to suit "Retina" resolution iPads.
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