See this video of a talk from the TUG (TeX User Group) 2010 Conference.
Apparently in just a week he wrote up a TeX-based eBook reading program for the iPad in his spare time. It looks like it's nowhere near "ready", but if he can get this far in a week, this bodes well for the possibility of similar techniques being a distinct possibility in the near future.
For those who aren't familiar, TeX is an advanced typesetting system which produces much higher quality typography than your typical ebook renderer, including end of line hyphenation, balanced whitespace distribution, pair kerning, ligatures, etc.
I have no interest in the iPad, but it would be great if we could see similar technologies on other devices.
That said, he think he could have done better with the sample. Why did he leave the margins so big?
(By the way, there are other videos from the conference which people here might be interested, such as Donald Knuth's (the inventor of TeX) hilarious discussion of the successor to TeX.)