...Which works fine as long as you are in HTML... but what about citations? There has to be some sort of portable way to reference specific portions of the document no matter where it is printed or accessed.

An anchor link isn't typically visible (though you could make it so - with a section number for instance ;-) and as such is not portable to other media.

If anyone wants to get up to speed on where all of this royalty mess came from (through 2003), here's a paper I wrote on the subject:

The Digital Performance Right and its Effects on Diversity in Webcasting

The rates have been successfully challenged and averted in the recent past, and I am confident that they can be again.