Another thought.
The PSP Linux Project is trying to develop a Linux which can be installed on the PSP. The problem is that the PSP uses the MIPS R4000 processor. AFAIK, there is no Linux which runs natively on the R4000. If the PSP Linux Project succeeds, that will open up the PSP to running Linux apps. Since there are many ebook readers available for Linux, it should be possible to install Linux, then install an ebook reader application on top of Linux on your PSP.
Moreover, if you can get Linux up and running on the thing, you should be able to use it as an mp3/mp4/avi/flash/etc. music/video player. Maybe even use it with an external usb DVD drive as a DVD player! Plug in a keyboard and mouse and use it for word processing!
In the absence of a native MIPS Linux, there is an emulator program for the MIPS R4000 called Bochs, which emulates an x86 processor. It is possible to install Bochs, then install Linux (or even Windows 95) on top of Bochs. There are two problems with this. First, because Bochs emulates an x86 in software, it's going to run an OS written for the x86 (like most Linuxes or Win 95) rather slowly. That means that video and possibly audio playback probably would not be practical, running this way. Second, the PSPs sold in the USA had only 32 MB RAM. Bochs uses a small portion of that 32 MB for itself, so whatever OS and apps you run on top of this would all have to fit into the remaining RAM. So even though it may be possible to run Win 95, it's going to be hard to squeeze Bochs, Win 95, and an ebook reader app into the space available. I wouldn't say it would be impossible, though. And an ebook reader application doesn't necessarily need to run very fast to be usable. And ebooks in txt format can be read by any text editor, such as Notebook which is included in Win 95 anyway (although you wouldn't be able to view pictures, of course, with a simple text editor).
It's probably more reasonable to try to get Bochs + Linux + an ebook reader application running on the PSP. I say that because there are a number of popular versions of linux that specialize in running well in astonishingly tiny amounts of RAM (e.g., just 16 MB for Damn Small Linux!). In fact, Bochs (which is itself open-source) includes a version of Linux along with it. I'm not sure which Linux distro ships with Bochs, however, so I have no idea what are the resource requirements of that distro. Nor do I know how difficult it would be to install Bochs + Damn Small Linux (DSL) on the PSP. Nor do I know if there's an ebook reader app readily available for DSL (again, ebooks in txt format can be read by any text editor, which any version of Linux - even tiny ones like DSL - include anyway).
I'm no computer guru, so I can't help you get any of this done. But I bet you could do it, with enough patience, effort and enthusiasm! And if the PSP Linux Project succeeds reasonably soon, that would open up the PSP to all kinds of new uses.
http://www.linuxdevices.com/news/NS3739081571.html
http://www.engadget.com/2005/08/13/linux-and-windows-on-the-psp/
http://www.hacker.co.il/psp/bochs/
http://www.psp-linux.org/
http://tuxmobil.org/ebook.html
http://blog.sandipb.net/2005/03/30/introduction-to-the-thoutreader-ebook-reader/
http://www.linuxjournal.com/article/7975