If price were no object, I would suggest an Ultra Mobile PC (UMPC). Many of these have 7" 800x480 screens and come with Windows XP, which means there are about a dozen software e-reader packages that work with UMPC's. For more information see
umpcportal.
One of the cheapest UMPC's is the Pepper Pad 3, which runs Linux rather than Windows XP. This makes a really nice e-book reader - it comes with a basic version of the Mobipocket Reader pre-installed and the "free" FBReader software is also available. Both software readers are customizable for what you want (colors, font size etcetera), but the MobiPocket Reader always has a white background. For screenshots see
MobiPocket Java Reader on Pepper Pad 3. In the screenshots I am using black text on a white background, but this is completely customizable in FBReader and somewhat customizable in MobiPocket. The PP3 is at the low end of UMPCs, but even it is $650 on Amazon. There is a Pepper Pad 2, which actually has a slightly larger screen and may be available used (it was for sale new until last month) - but it uses a different microprocessor and I'm not exactly sure what e-book capability it has (there is definitely a version of FBReader, but I'm not sure about MobiPocket Reader). You could ask on the
Pepper Forums.
I can also recommend the Nokia 770, which is $275 on Amazon with a 800x480 screen - but the screen is only 4.1" (vs the 7" PP3 screen). This may be a step up from the Axim, but perhaps not enough to make it worthwhile. Also, the only available e-book reader software is FBReader and this does not read DRMed e-books. Screenshots of the Nokia 770 are essentially identical to those from FBReader on the PP3, because both have a 800x480 screen. The only difference is the number of pixels per inch.
On the subject of DRMed books, if your brother is buying encrypted books then he may already be tied to a particular vendor's e-books (because these are often not transferable to a different reader). This may limit your choices if you want to stay compatible.