Not that bad...
I know we pay less for electronics on this side of the Atlantic, but I wouldn't really call E-Readers 'expensive.' I think you can get the cheapest Kindle for under $120, which is about what I spend on gas over 2 weeks' commute - not really out of my price range for a device that I use every day.
I still like books quite a lot, and I still buy first editions from certain authors (Just ordered Stephenson's latest,) nothing is quite like high quality printing on paper.
But I have used my kindle daily for about a year now, and most of your complaints are pretty much off base. Battery life on a Kindle just isn't an issue. I plug mine in maybe once every 3 weeks, when I feel like it's been a while since I charged it. Just a micro-usb cable on my computer at work, which I need for a few other devices anyway.
I've dropped my kindle plenty of times, packed it inconsiderately with hard objects, grabbed it with muddy/oily hands and covered it in finger prints, etc. Aside from a little extra flexability in the case, where I presume I snapped off a plastic clip or two, and a bit of a dent on a corner, it works perfectly. The screen isn't glass, so it hasn't broken, and scratches barely show up at all.
I solve most of the other problems you mention by mostly avoiding paying for the content I read. I'm sure enterprising minds could figure out how that might work.
And I don't "need" 500 books (it would get quite tiring browsing that many,) but it is nice to have quite a varied selection in my jacket pocket. I never know what I'll want to read next, and I tend to finish books frequently, I'm glad that I'm never really short of books.
I will say that the regular kindle is pretty poor for reading scanned PDFs (especially since these tend to be textbooks, with quite a lot of text,) and the idea of e-textbooks in general bothers me, since, when I need textbooks, I generally need no less than 6 of them at a time, with a handful of bookmarks (rulers, string, other books) in each. That sort of use case is quite tricky on one screen, no matter how big it is.