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I feel your pain.
Hey Gordon,
Tell me about it. This thing is sooo close, yet so un-PDF friendly. This is the woe of the eager e-reader: a few devices that are almost there, just enough to tantalize but not fully accomodate us. I’ve experimented with both the Sony Reader and the iRex Illiad, and neither of them are quite yet suitable for the tasks you describe.
I share your complaints about the Sony. It’s great in most respects, but frustratingly worthless for the thing that I really want it for: the ability to read all my PDF books and PDF exports of blog posts.
The Illiad displays much more legible PDFs (thanks to its larger screen,) but is sensationally expensive (like $700 expensive), takes a full 60 (!) seconds to boot up, and has a tremendous lag just to change from one page to the next.
I keep waiting (and checking the internet every month or so) for someone to come out with a suitable e-paper device that displays PDFs properly and is half-usable, but thus far the wait has been frustratingly fruitless.
Do keep us posted on your own search! :)