1. One downside of this interface is that it's difficult to keep track of where you are. The scroll metaphor is broken and the pagination metaphor is not fully implemented (you need an indicator of where you are, like pages in a real book). The percentage indicator doesn't cut it.

2. Control feels too fine. It's too easy to lose your place and mental effort needs to be devoted to properly placing the page divider. I would like to see a version that scrolls in discrete steps by line, perhaps with a little smoothing by way of animation. This would also give you a new feature: using the divider as a reading aid as people often do with rulers and real books.

Think of it this way: you have two controls, page turn and pixel-advance. What is a control with granularity somewhere between those interfaces that combines some of the advantages of both for navigating?

3. I'm not convinced by the divider. I think it either needs to communicate a visual metaphor, perhaps implying that the new page comes out on top of the current page using shadows, or just needs to be softer using blurring or fading the adjacent text out to white. And I don't think you should be able to cut a line of text in half (addressed in (2)).