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First, your example about making mixed tapes/CDs of music you bought. That was (and to the best of my knowledge remains) legal. If you *owned* the albums, and you made the mixed tape for you *own* use, that is. Making a copy for a girlfriend wasn't. (Then again, I'm going through all those old cassettes and downloading from iTunes all the songs I don't already have, so they are getting paid– 'twas a problem of liking the one song, not wanting the rest of the album, and they'd stopped making singles).
But as for the real points. I agree, charging the same price for the e-version as the paperback is absurd. Even if the author were getting 100% of the difference between manufacturer's overheads and standard profit and the price– some would consider paying that, but most would still balk. Their greed is only to the pirate's benefit. They should look at what Jobs did with iTunes and notice the massive sales music producers are getting as a result of all those little 99c/$1.29 purchases. Those who want the album will still get the CD; but all those people who only want a song or two (like me), it's entirely new, wouldn't-have-otherwise-had sales.
As for your point about how do you implement DRM yet let people be able to switch devices/platforms. Well, while the market's fragmented between different devices you've got some protection for the typical reader: incompatibility could prevent too much "check out this book" sharing, since most won't want the hassle of conversion, although some would definitely say that saving $10-15 is worth it. (Of course, if the books were $4-$5, there'd be no question). But longer run… lower the price, but also, what about doing something like Quicktax does? With this purchase, you can make x copies. (And remind them that that includes back up, or device changes). So, if you know you only get 3 (or whatever they decide is reasonable) copies, and you know electronic devices only last a couple of years (at most) until you get a new one…do you really want to share your copy with every member of your book club?
(I'm running regressions in the background… time consuming and keeps interrupting so can't get any 'real work' done. MIght as well comment on this!

Hi PolyWogg,
May I put a link to this wonderful article on my blog on publishing: Thanks.