Google books _is_ supplying the scanned text for mobile reading. Sort of. The table of contexts (hit previous pages) is an image. The page I pointed at has the title of the book at the top, rendered slightly incorrectly due to the joys of OCR -- Cables instead of Fables.
So, yup, they are supplying their understanding of the scan, not just the scan. I want to know how many people are reading stuff this way.
ETA: Has anyone who lives within the kindle coverage area tried using the browser on the kindle to read google mobile books? Did google lock the kindle out somehow?