It is very disheartening that a simple question as to whether an ebook reader developed and marketed by Apple would drastically cut into Kindle sales, can deteriorate into an Apple bashing session.
I was never crazy about the Apple laptops we were given to use by my school system. I preferred the PC that I was already using. However, I would not say that one device was worse than the other in regards to performance. They both met their stated specifications and performed the tasks for which they were created. We tend to like that which with we are familiar, so I was more comfortable with my PC.
I have devices of all makes and models. I have both a Toshiba and a HP laptop. I have a Sony reading device and a EBW1150. I have the original HP IPAQ mp3 player and an Apple IPOD. All of these devices work very well and each has it's own unique characteristics that suited the needs I had when I purchased them. Limiting myself to one brand over another seems. . .well, limiting.
As to the original question, I don't think it would "kill" the Kindle. As I obliquely referenced with the above narrative, there is room for a variety of devices.

The actual test will be how well the ebooks are marketed. Apple has done an amazing job with their music downloads, yet Kindle has also been extremely successful with their ebook division.