I think that being able to flash the reader will work somewhat akin to rockbox on ipod. Custom firmware might be enabled, but it will be limited to enthusiasts.
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The first Reader DRM attack I'd think people would sell out Sony for would be to allow the Reader to be attached to multiple CONNECT accounts so people could "lend" ebooks purchased from the Sony CONNECT store.
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It's already limited to two sony readers attached to the same account, not any two accounts that can share books.