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We're trying to do something commercial and not just a school project and we've already spent a huge amount of time (and love, yes) on it.
As for PDF, I've read 10 books in PDF already and the overall experience was nice. We can do pretty much any format, but we're sticking with PDF first, because generating PDF with LaTeX is much more advanced than any other format.
It is true that the toughest part is handling all those PDF requests, but for 90% of the users, I'm pretty sure they'll stick with A4 PDFs for the moment, and we generate these ones only once, they're in the cache afterwards. The beta will give us a lot more details on this problem, that's why we're rushing to release it as soon as possible, and tweak the whole system to work much better.
As of rubbing it in gutenberg.org's nose, it'll take some time for us to get as many books as they have, we can't simply parse the whole site like manybooks or other did, we need something much more complex and divided in parts & chapters. A bot could do it, but I'm not sure that it'll do it quite well. So we won't start with such a huge amount of books, but at the same time, we're not really doing the same thing than what they do. The user content component, and the generated newspapers (tough one, much more PDF generated) are also key components of FeedBooks.
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