Without seeing an Iliad in action (something that is probably safer for my wallet), I would say it's similar since you use the stylus (or finger, coin edge, frozen mackerel....anything really since it's not a Wacom but just a touchscreen) to draw on the screen itself.

I'm not sure if it would matter though since it may store the annotation info as a specialized file. Maybe someone with both a Ebookwise and Iliad would know? Are there such beasts?