Google Reader's homepage has been updated and it features a small feed reader with three categories: "news", "sports" and "popular". The iframe points to this page and I think Google Reader should offer a customizable version, so you can embed it in your site.
Google already offers a cool AJAX Feed API that can be used to display the most recent posts from one or more feeds, but Google Reader's interface is more user-friendly and it lets you read the posts without leaving the page.
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