It looks like that app, which they are calling the Kobo Instant Reader, launched last month to a quiet beta. It was such a quiet launch that I just now noticed, myself. It doesn't work with all browsers yet (IE and Firefox not supported) nor does it support earlier versions of iOS, but it is now live. If you're running a later version of Safari or Chrome, go check it out.
The app is accessible via your web browser, though it does need to be downloaded and you need to log in before you can use it. As you can see, the KIR supports both landscape and portrait modes. There are 4 fonts, a slider bar for font sizes, and you can also change the alignment of the text. But there doesn't appear to be any annotation options, not even bookmarks. I cannot select any text at all, so dictionary support is out to.
Well, this is a beta release, so we shouldn't expect too much.
While I'm not completely sold on the concept of cloud based apps, it does solve the problem of freeing the app from the the clutches of the device it's running on. You might recall from last year when Apple decided to extort a 30% vig from all the media apps, including the reading, radio, and video apps. Even Netflix and Hulu didn't escape unscathed.
Apple could enforce the vig because of their absolute control of iOS. So long as apps were available only through iTunes, Apple could blackmail developers into toeing Apple's line. And that would make cloud based apps like the Kobo Instant Reader all that much more appealing. They can bypass Apple's control by allowing users to download and run the app via a web browser.
In retrospect, I suppose we have Apple to thank for spurring this technology. Their choke hold on iOS pushed developers to find ways to route around them. Yes, a number of these project predate Apple's escapade last summer, but Apple has been difficult to work with for as long as there have been apps in iTunes.