It's not an optical illusion, interlacing, or you going crazy. All LCD displays do this. They don't update the entire panel at once, it's done line-by-line.
However, with most LCDs you don't have very fast moving objects (particularly vertical lines) scrolling horizontally by the screen.
With the iPad in portrait mode, as soon as you start scrolling, everything is moving "horizontally" on the panel which makes this effect really obvious. (I suspect the fact that it's higher resolution, and therefore has more lines to address, also contributes)
If you open up a large window on your computer and quickly move it from left to right, you should also see that the bottom edge drags behind the top of the screen. Depending on your screen size and resolution, how obvious this is will differ though.