That's intriguing. My first thought, though, was that what I love most about the Kindle is it's eInk screen, which requires as much light as a normal book. The downside, is that you can't read in the dark. The upshot is that there's no backlit LCD waging war on your sore eyes.
But what if Apple could have it both ways? Truth is, another little computer you've likely heard of has already pulled this off...
So maybe Apple's netbook will come with a nice bright LCD for computery things like YouTubing and web surfing and a black and white high contrast mode (a la the XO Laptop), perfectly suited for lengthy reading sessions in the park or with the aide of a bedside lamp?
Mix in a touchscreen and the iPhone OS...could be a Kindle killer.