Still plugging along at that iPhone eBook reader. I've now developed it to the point where it can break things down by chapter.
Here's a look at the list of books; note the disclosure triangle indicating you can access the book's chapters (which is just a directory). (I've only split one book up so far--ideally I'd have the iPhone do this automatically, but I think it might be better to have a "server-side" program do that and transfer the resulting files to the phone, à la iTunes.) Here is a list of chapters; the titles are just taken from the names of the text files, so again it's pretty simple. And finally here is a chapter being read; notice that the back-arrow says "Chapters," but it says "Books" if you access a book that doesn't have any chapters.
More to come!