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Hyphenation is linked to the screen size, so it has nothing to do with the program that created the RTF file. It is a problem with all reflowable format. You could support it, but with a software on each reader and some sort of dictionnary too (won't be easy to do such a thing for multiple languages).
RTF doesn't support embedded fonts, do you believe that each and every book in your library use the same font ? They don't.
Maybe YOU just need simple features and a poor formatting system, but I don't believe that's the case for everyone. Most of the people screaming around that PDF is dead don't know anything about LaTeX and just had a poor experience with A4 PDFs once. The portability of PDF files may be an issue, but the poor formatting of RTF is an issue too. If you really believe that RTF is perfect and that PDF is the devil, well then good for you... I'm looking forward for something both portable and powerful, but I know that it'll be hard to make such a format. In the meantime, I believe the best solution is to store books in a database or using XML, and create files out of it (some editors use LaTeX already). Keeping all these books in a single text file (TXT or RTF) is the wrong choice, you need to know where the chapters start and end for example if you want something ready for any advanced format. With such a system you can create what you call "absolute positioning" in a relative way: each device and each person can have his/her own formatting. You can also create pure text files out of it, but that would be like downsampling an audio file. When and if a powerful XML format become available, the same system will still work, creating just another kind of files as an output.
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