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Some kind of markup language, whether it's HTML, TeX, or something else, would be a better format to distribute than PDF. Formatting for the device should be something that happens automatically when you load the source file on the device. There's no reason a reader couldn't hyphenate (and handle ligatures, if you want them) on an HTML file. HTML software just doesn't usually bother.
There are very few situations in which the kind of tight control over formatting provided by PDF is valuable, and I think most could be handled using other means. For example, music transcription isn't currently handled well outside of strict page control software, but that's just because a good generic markup system hasn't been popularized yet.
The other thing people bring up is page numbering, which can be important, for example, in scholarly references. I think a new way to accomplish this, e.g. using word or character count, will become accepted within the next 5-10 years.
Maybe re-flowable PDF could eventually replace the current PDF, but my money is on something smaller and more open, with less emphasis on output format, which will become more display-dependent.
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