The Kindle treats each page of a PDF as an image that it scales to the width/height of the screen. You can zoom in and move around, but it's not at all like reading a book.
Given the PDF format, this is really the only way you can really deal with PDFs that might have images, columns, etc. Much more inherent formatting than with just a text .mobi.
If I zoom them to be readable they look like crap (and its very tiring to read them) I've got an Illiad V2 which I originally used for this (167 dpi) and its "ok" but not great, and not enough real estate for the whole document. My 3rd gen iPad is quite nice but has the issues noted above. I had hoped the Plastic Logic folks would have made a dent here but alas that was not to be.
My dream is just having an e-paper monitor next to my regular monitor to which I can just pull text over to read. I wish I could just get my hands on an e-paper screen of a decent size to hack.
