Out of curiosity, why can't they have it as a reader of books that you download on your computer and transfer over via iTunes/any local area network. I admit this is not what they wanted most likely, but they could look into developing applications for Android devices and such as well that allowed royalty-free purchase in an application. As an iOS developer myself, I believe this would bypass the restriction, but I don't know for sure.
The problem is that this is not the model that is the most hip. What an iDevice user wants is one click purchase to download system. Apple knows this and knows that requiring such would defeat their competition.