It's completely doable, as Eucalyptus shows on the iPhone. There's absolutely no excuse for not doing proper typesetting, other than they simply don't notice the lack of it.
I expect that of Sony, but I'm surprised that Apple of all companies don't have people that really care about these details on the team.
According to the About text Eucalyptus relies on a customized version of libhyphenate, plus a number of other open components (including LinuxLibertine as the display typeface).
I love the look of Eucalyptus and haven't seen any other reader that comes close (particularly at the iPhone/iPod screen size and resolution, and ESPECIALLY given that as far as I can tell they use the .txt versions of the Gutenberg files). It's not that they've sacrificed the right goats to the gods of text presentation magic, it's just that they actually give a damn what the output looks like.
I'm surprised that Apple of all companies don't have people that really care about these details on the team
That's an extremely applicable point in many respects. I'm surprised that Apple of all companies don't have people -- senior ones at that -- that are on the verge of open revolt over the direction (http://www.eff.org/deeplinks/2010/06/eff-nothing-new-about-i...) in which the company has been taking personal computing lately.
Well I'm guessing Apple has been making said senior people very rich with the last 5-10 year stock growth, so they probably have some cognitive dissonance stopping them from speaking out there.
I expect that of Sony, but I'm surprised that Apple of all companies don't have people that really care about these details on the team.