I will be happy if this problem is an isolated hardware problem (since then they can fix it by giving me another one). Unfortunately, I doubt that is the case. I have read numerous similar reports as mine, including one from a PC mag editor who first reported it, with whom I have been in touch. His happened in NYC after about 10 min outside. I am not talking about baking this in the hot Arizona sun, but sitting in my back yard in Boston on a 60 degree sunny day. Now part of the problem may have been the case. I will experiment with the case off. But my guess is that this thing heats up very fast, even when in idle mode, because of the glass and aluminum construction. It's possible the aluminum back is the primary heat sink and if so, then a black rubberized case around it would probably not be a great idea.
Should this thing be able to be used outside in sun - yes definitely if they want it to succeed as an e-reader. Kindles are fine outside. My Lenovo thinkpad is fine outside as well (and probably generates more heat). I suspect it's not so much heat generation, but heat accumulation, that's the problem.
In any case, I'm not ipad bashing - I think it's fabulous, but would like to be able to use it in good weather.