I’ve completed a script that will allow you to read Microsoft .Lit (Reader) files on the iLiad. It uses my port of convertlit.
Basically what will happen, is you copy the .lit file to your iLiad. You will select it from the contentlister like you would a PDF or any other document. When you do that, it will launch my convertlit script. It will explode the lit file into an OEB, and automatically create the manifest.xml with the Author’s name and title of the book. It will even use the cover art embedded in the lit as an icon in the contentlister.
After that, you will need to delete the lit file yourself (I won’t do it, in case something went wrong), and open the OEB with FBReader.
I’ve tested this with a few example LIT files I’ve found online. I haven’t, however, tested with a DRM5 file as noted in convertlit’s help document. If anyone has one of these types of files and would like me to test, I’d be happy to do so.