Considering that this is Digg Reader's first public outing, it is very, very good. This can only bode well.
Well done guys!
For example, one of my subscriptions is Hacker News (http://news.ycombinator.com/rss). If I 'mark all as read' then the unread count goes to 0 and all articles titles appear in plain text, as expected. 10 minutes later the unread count is now 4. Click on that subscription and there is now maybe a dozen or more titles in bold text - and not just the top dozen (the most recent) but randomly spread out.