Wow, that looks pretty well done. The iBooks App is in the App store right now too. The format is HTML-based, with some proprietary extension ( -ibooks-layout-hint: anchor; in CSS etc). But don't expect an Android reader anytime soon...
It wouldn't have been impossible for Apple to push the CSS extensions to {CSS3}+1 and be using an open format. But no, it has to be Apple-branded and proprietary..
On the other hand, the textbook makers currently have such a lock on school districts that I don't feel really bad about this. iPads will only get cheaper.. I'm almost positive kids will complain when they get the shitty scratched up hand-me-down iPad2 the school district has had for 5 years when iPad7 is available -- but I've had worse experiences with paper textbooks. :-)