True grayscale video of any quality would be a stretch as you'd likely be dealing with refresh flashing between frames at even 1fps. Every hack I've seen for improving refresh behavior involves switching to 1-bit color depth. Some solutions preserve the appearance of grayscale through halftoning like a newspaper photo at the expense of image resolution.
One thing's for certain about the Nook Touch series, you'll never get anything newer than android 2.1 on it. A number of closed binary drivers need to be replaced for truly custom firmwares and you'd be limited on RAM anyhow. You will not be able to expect B&N to stand behind the product line in the future. Note that the most recent 4gb NSTglowlight lacks an SD slot and is thus more difficult to root. That said, I'm very pleased with my Glowlight as a bare-bones Android device.
The Kobo Aura HD tablet would at least get you Android 2.3 and is rootable. I'm not certain how strong its developer community might be. One advantage over the Nook seems to be more even distribution of light across the display surface but I can't confirm from hands-on experience.
If you're comfortable with Linux, you might want to consider the Onyx Boox. There's at least a few scraps of information on the manufacturer's site about developing custom Qt apps for the Boox platform. Onyx has announced new tablets using Android but they don't seem to be available in the wild yet.
PocketBook out of Europe supposedly makes all sorts of e-ink Linux tablets, little, big, and waterproof; I'll be damned if I could tell you how to buy them though. Any evidence of purchasable shipped product I can find in English regards old models and dates from a couple of years ago.
Personally, I'm hoping the Earl GPS/walkie talkie Android tablet makes it out of vaporware.
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