The iRex iLiad (any chance we could dispense with the lower-case i prefixes?) was recently reviewed by Ars Technica. While at $600, the reader is too expensive by far for mainstream (or even not-so-mainstream) educational applications, it does have some impressive features that hint at great applications for this technology. In particular, Amazon's and Sony's e-book readers don't allow for annotations, a major shortcoming compared to paper books, especially for academic applications.
Writing directly on the screen makes the ebook feel that much more like a "real" book. Annotating documents with a stylus, drawing pictures, and even composing music on the iLiad are all possible thanks to the inclusion of a Wacom sensor board installed directly behind the screen. The board generates a magnetic field, but does so only when the stylus is detached from its cradle. A resonant circuit in the stylus receives the magnetic energy and uses it to transmit a signal back to the sensor board, which reads the pen's location, angle, and speed atop the screen. It's quite accurate so long as you don't try to do engineering drawings, and trying to draw notes on a staff of music is also tricky.
This feature also allows the iLiad to act as a notebook, as well; the Ars author found that both drawing and text were easy to enter. My gadget lust is certainly piqued, but that's as far as it goes at $600. However, as these features filter down and this niche grows, a book reader with handwriting recognition could certainly find a place in my messenger bag (and I hope a lot of student backpacks).