I don't know anything about jailbroken iPhones, but you might see what you can find out about Eucalyptus. If I understand what you are able to do with Apps, you can essentially move your books into their storage files on the iPhone, so you can use the App to read your books. Eucalyptus reads Project Gutenberg books, which are probably in the same format as your text files. And from your description, it has the same library sorting mechanism as Book Z. But I don't know what the underlying file structure is.
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