I could see it selling well at a 99.00 price point- after all, that's just a bit more than the 58.00 price that enticed me to get one.

Especially if Sony were to fix the clunky UI, add some enhancements that make the e-book a step up from paper, instead of just an alternative. I could envision a touch interface with built in dictionary where you just touch a word and up pops the definition. That would go a long way to justifying paying almost the same for an e-book as paper in my mind. Or how about something like a podcast where you just subscribe to your favorite publications and the latest one is automatically placed on your reader at every sync. The New York Times has 23 free podcasts on iTunes and I don't see either the New York Times or Apple suffering.
I don't see why it couldn't fall to the 99.00 point. Doesn't Palm sell a color display palm for 99.00? Didn't I read somewhere that the new Vizplex displays are significantly easier (cheaper) to produce than the older e-ink displays and are assembled on the same manufacturing equipment used to make LCDs?