Apparently this is even harder, as there aren't many Japanese ebooks about yet.

If you have bought one, what encoding is it in and which device do you read it on?

There are actually a lot of Japanese ebooks, and a lot of them are manga.
E.g.:
http://www.shinanobook.com/
http://www.ebookjapan.jp/ebj/

The problem is that they often use their own encoding and their own software.
However, they seem to have software out for iPad and iPhone lately. You'd be out of luck for the kindle, though. The eBook market in Japan is huge, I've heard, but a large proportion of it is comics rather than novels.

I have never bought a Japanese eBook, though.

I've never bought one although I keep thinking I should look into it.

Presumably them using their own encoding isn't a big problem if you can download and use their own reader.

Yes, that is true.

I highly recommend denshika.com (電子化ドットコム) (http://www.densika.com/).

You can buy books off of Amazon (or anywhere else) and ship it to them and they will scan your books and put them in pdf format for you (which they email to you when finished). They will then dispose the actual books (unless you pay to have them shipped to you) so you don't have to pay ridiculous shipping prices while still having the vast choices of books that paper books provide right now. It costs 150 yen per a (300 pages or less) book to scan them and you can also pay 100 yen per a book if you want to get the books OCRed (so you can copy and paste anything out of them) among other options. They accept paypal so you don't have to live in Japan or anything to use their services (I live in the US). I have used this service once and was quite pleased with the results.

I found ebook Japan's ebook reader app, and downloaded it onto my phone. As I can't yet read much Japanese it's hard to see if I would use it, although I have trouble reading the little words on the manga that it comes preloaded with.

Aha! I've figured out how to download an ebook Japan reader for Windows onto my netbook.