Thanks for the reply. Both options certainly are valid, and it's not as if Apple has a clear-cut policy w.r.t. ebooks on the App Store (though Jobs is known to have a rather bizarrely dismissive attitude towards reading). I guess it boils down to two separate issues: usability, and ease-to-publish.
Usability-wise, for light reading having individual book "apps" might save time. Then again, for heavy readers, or for readers who like organizing their book collection (sort by author name, sort by title, by year etc.) individual apps can't cut it. Also, different ebook apps will inevitably have different interfaces.
This ties it to the second point. As long as Apple acts as a gatekeeper, and with its current byzantine approval process, any bugfix, as you pointed out in the article, cannot be pushed in a timely manner. Worse -- say you have n books, all prepared in the same way. You'd have to push n updates, all of them might have to be resubmitted if they get rejected!
Both suggests that, while yes, Apple's App Store poses commercial risks (wasn't there a commercially-developed emulator that got rejected too), it might not be an effective conduit for books anyway. Between Stanza (for free books) and Kindle (for paid books), there are ways to publish digitally without running afoul of the censors.