I really like the idea, how about a quick way to 'calculate ~ reading speed' feature? display a random paragraph, click start and start reading, timer stops in 15 seconds and you click on the word you last read, extrapolate from there.
Even better would be weighting that by testing comprehension. And even better than that would be finding the relation between reading speed and comprehension, letting the user set either and automatically estimating the other.
I'm not sure if you're sarcastic or not - anyway, perhaps the reading speed could be changed after signing up. First reading speed value is calculated with average reading speed, 150wpm seems safe (wikipedia based ballparking here).
Perhaps you should mention on the landing page that this requires a paid Instapaper account.
Even better, provide a way to use it without a paid Instapaper account.