I reckon a lot of folks with smaller screens are probably using apps such as Mantano, Aldiko, etc to browse the OPDS feed from the content server. Mantano does an excellent job handling navigation when using a tablet (at least from my experience with a Nook Color).
Unfortunately, the layout of the mobile site is hard coded into Calibre. There are no templates, etc so you're going to have to change the Calibre source code if you want to change the layout. Same is true for the OPDS/Stanza feed.
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