I like your approach, however the ratio of the population reading Time on the iPad should be adjusted upwards because we can probably exclude some segments of the US population who are not likely to be either Time Magazine readers nor iPad owners (e.g. people without much disposable income). So, given that someone is an iPad owner, my intuition is that they are also more likely to read Time (when compared to the general U.S. population which was used to create the 1% ratio) because they probably share more social and demographic characteristics.

But nevertheless you're right, even if the percentage of iPad owners reading time was 2% or 5% or heck even 10% (and even if those iPad readers are more valuable from advertiser's perspective, which is not necessarily true because it depends on the advertiser), it doesn't look like an iPad is going to replace a paper copy of a magazine anytime soon. It would be cool to make some bets about this though.