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There is a much cheaper option for annotating pdfs, called Noterize (59p on UK store, I would assume 99c on US one).
PDFs can be loaded from Box.net, Dropbox or a link on an any web page with the builtin browser, but it doesn't support drag-and-drop in iTunes on Open In on the iPad.
You can draw foreground lines or highlighters of variable thickness and width, and erase existing annotations. You can also add text boxes and voice memos.
I haven't yet seen any way of getting the documents out of the application into anything else.
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