> Typically, the price of books is largely a function of the costs of manufacture and distribution.

I don't think that's always true. The cost to print and ship hard cover vs paperback books is less than the price difference between the two.

I'm surprised about ereaders not supporting what you need for complex books. When I looked at Apple's version of epub it I thought it was pretty impressive. The Kindle format is more limited, but if you can represent something with html, css, and javascript, iBook should work.