I've also looked at this myself - there are a few readers that are ~10" and read PDFs quite well (e.g. the Onyx BOOX M92 or the aforementioned Icaus eXceL), but as far as I can tell none support true PDF annotations (e.g. highlighting some text). They typically support sketch or typed annotations, which can be merged back with the original PDF, sometimes as an additional layer. But none seem to support native PDF annotations...
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I've also looked at this myself - there are a few readers that are ~10" and read PDFs quite well (e.g. the Onyx BOOX M92 or the aforementioned Icaus eXceL), but as far as I can tell none support true PDF annotations (e.g. highlighting some text). They typically support sketch or typed annotations, which can be merged back with the original PDF, sometimes as an additional layer. But none seem to support native PDF annotations...