I agree with your suggestions, but i believe the application should also be finger friendly for those who would prefer not to use the stylus but their fingers.

Attached are screen-shot of the same application in landscape mode. I also like the idea of you typing the chapter and verse but that option should be available when the keypad is open.

When closed the the navigation method shown in the pictures would be preferable

Couldn't figure how to separate the images and the are bunched up together after posting