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I don't think that the hard reset puts the Reader back to the way it was bought. It resets all user-altered things to their original status, using the system software which is currently burned into the flash bios. The update would have overwritten data in the flash bios, which would not be reset in such an instance.
At least that's the case with my Palm units -- whenever I've done system updates, they have held even through hard resets, while all other things which I have changed have returned to the original state. The same with my computer motherboards -- once the system bios flash has been changed it stays changed. Same with my digital cameras and my mp3 player as well.
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