You know, I was thinking of the scenario presented in Fahrenheit 451, and how preposterous many felt it could be. It would be too hard. Yet we are setting ourselves up, aren't we, by trading in our hard copies for books that can at any moment be edited or completely wiped away from your possession by those in control. A simple line from a restructuring of the scenario might read "I remember the day they came for our books, and there was none." I don't own an e-reader (although they do look cool, and I can see the allure). I sometimes feel like I'm one of the last people actually buying actual books, but I believe I'll keep on doing so.
As far as the violation of privacy. I suppose it's possible that it could just register a highlight and not where that highlight came from (unlikely). At the very least that that information is not being stored. I think it is only a matter of time until it is being stored (see google and they new system), and then we'll have the corporations combining our highlights/reading choices in order to "better serve" us with commercial opportunities, and the government gaining access and analyzing them in the name of National Security. If it's not happening now, it's almost a just a matter of time.