As to reading in the dark it is really hard to say. As of this microsecond only LCD devices or an eink device with an external light are current options. In a few months time the first devices using the 3Qi hybrid/multi-mode display by Pixel Qi will hit the market and a few months after that there will be even better options.
To be honest I would not go with anything until the last possible moment, I see the industry as being at the big point of explosion on the mass market. The next 3-months will have a lot of new devices and the 6-8 months after that will see even more device options.
For now read, read and then read some more...it might be nice to get her one of the new readers from Sony, the 5" while not huge is nice in that it can be put in a pocket (with care) or purse if she likes reading while out and about. The new Sony's will be in most major retail stores by the holiday shopping season and right now there is the well received Jetbook reader device you can checkout at Bed Bath and Beyond. It is not eink but is also sort of nice, plus it's a good price.
I would read the News section here on MobileRead to see the latest info...
And yes, in general, unless specifically formatted for a small display, PDF's not not so hot on smaller display devices. BUT, apparently the Adobe Digital Editions ePub books are kinda nice on any device...but people who have done more than read about them will certainly offer better info there...
Right now if you were forced to choose, probably the Kindle DX ....but there are at least 2, and likely more, larger format readers due out this fall or early Q1 of 2010...then there is also the iRex current devices, which are pretty spendy but really nice.
Glad it is you rolling the dice...nothing worse than buying for the MIL...no matter you are gonna be wrong!! hehehehehe....good luck!
