Except that PDFs aren't just a universal text format.
Admittedly, anything a PDF can do can be done in XHTML, although at a somewhat more system resource intensive level...
However, I have serious doubts about iPaper being able to do the other things that PDF was originally designed, and later adapted, for.
Security features are pretty solid in PDF formats if you know how to use them properly.
You can make self-destroying files if you know how to use Acrobat. You can lock down printing access to certain computers, etc etc.
The claims of security that iPaper espouses for being a widget don't gel with me. I've heard people say the same thing about Flash, but low and behold, any little flash game or animation I like, I have. How? I looked for the source file in the page code... Not hard to do. And websites are inherently less secure from interception than a physical format or terminal computer.
Not to mention PDF supports vector images and 3D objects, which is something very few multi-media document formats do support. I can't see anything in the iPaper documentation about that, and the FAQ is pretty extensive.
Unfortunately, PDF gets used and abused by people that just want to make shitty eBooks, because it IS a universal format (They should have stuck with LIT, dammit!), but it's got a lot of features that a LOT of people are simply unaware of.