Why would you love to see this happen? Amazon has the market on the e-book and book market. Apple has the market on the music.
Wouldn't it be more beneficial if Apple put their resources into what they know best and offer a solution (kindle on iPhone) for other areas of expertise?
Amazon, like Apple didn't get to where it is overnight.
Apple makes a profit on each book sold with the Kindle app and they have put no resources into it because they have no development time and don't have to negotiate terms with publishers.
First off, you are wrong in thinking they make a profit. Apple makes no profit on books purchased through the Kindle app. Amazon is slick enough to take you through a browser to their website, so they can avoid paying any percentages to Apple. This is why you need an Amazon account and not an iTunes account to make a purchase.
Because Amazon has a monopoly on books, not the hardware they carry it on. If an Apple tablet came with a Eucalyptas book reading engine it would mean:
-Apple would keep it more open than Amazon does with the Kindle allowing some level of competition
-Amazon would still have to let the tablet have access to their store or Apple could cut direct direct deals with publishers (which they may do anyway). As with any other paper industry, books are also struggling, which would mean they could cut the similar deals to Amazon.
-While the Kindle may have better battery life, a color tablet would be in far more use on a college campus due to it's ability to display color and it's multimedia OSX touch browser/multimedia abilities.