I used a medium clear organizer pouch to protect my Kindle II while I was vacationing at the beach and while camping. I could read and turn pages through the clear side of the organizer pouch. It worked very well, with a few exceptions: 1.) The zipper was in the way and 2.) it needed a little more structure. With a few simple changes that would not require very much design time or "re-tooling" if that's even a concern, you could make something simple that might sell very well.

My idea is for a medium padded organizer pouch with a clear back and a splash-proof zipper on the front. That's it a simple cover that does the job.

Some of the benefits:
1. The clear side being on the back, provides unobstructed view of the Kindle, without any interference from the zipper.
2. Padding provides some structure and protection if droped.
3. when done reading one could simply turn the Kindle around with the screen facing the padded side of the pouch for a little added protection. I feel this would provide sufficient protection in most circumstances, since the Kindle is mettle on the back. (For more screen protection a thin, stiff piece of plastic could be incorporated into the back panel.)