I have the same problem. It manifested the minute I upgraded my iPad 3 to iOS 7. Newer updates of iOS 7 have not addressed this bug at all and, therefore the problem persists. I'll repeat the symptom: when I select a word that I need to have defined, the dialogue box comes up empty. I'm given the option to search the web or to "manage". When I select "manage", I'm taken to the list of dictionaries. I have previously downloaded 4 dictionaries (English, Spanish, French, Italian). On my iPad (not so on my iPhone) all of these dictionaries display with a circle to the right. None of these "corrupted" dictionaries responds to touch gestures. They are literally frozen. In contrast, dictionaries that I have not downloaded display a cloud with an arrow pointing downward. A dictionary that has been downloaded and is functioning properly should have an "x" displaying to the right of it. A circle to the right that does not respond is an indication that this dictionary is corrupted and unusable due to, I'm convinced, a bug in iOS 7. I have tried all the tips given by amateurs and techies alike. I have searched the web extensively for a solution. Nothing has worked. I have deleted my iBooks App on both my iPad and iPhone many times, rebooted my devices, reloaded iBooks first on one device then on the other. When that didn't work, I changed the order of installation between devices, all to no avail. I deleted iBooks from my iPad and only ran it on my iPhone 5. The dictionaries worked fine. I deleted iBooks from my iPhone 5 and had it loaded only on my iPad. Again, the dictionaries behaved in the same way: they were unusable and unresponsive (circle to the right). No combination of delete, re-download, use Notes, reset the keyboard language, reset my global device language, etc. worked.
Isn't it telling that this problem does not manifest at all when reading a book in iBooks on my iPhone 5. On the iPhone, the dictionaries work perfectly well. So, what is it, then, about the iPad code that is causing this behavior. Is it an incompatibility issue with the device itself? More importantly, why has Apple not addressed this matter. Surely we 3 or 4 people complaining about this particular issue aren't the only ones who read books in iBooks or who have complained. But to talk to Apple Tech Support, they will readily tell you that "no one has ever brought up this issue prior to this call." Really? Even more egregious is the thought that Apple employees perhaps don't use their own devices. Don't they read? How is it that they have not detected this problem? Or, are they so super intelligent that none has ever had to utilize their own dictionary utility to look up a word? Obviously, this is not a priority issue to Apple or, worse, they don't know how to fix it and it's easier to simply let every one of us thing that we are the first to ever report it. How disappointing!