Sorry, I didn't mean to make you think I was smart. In fact, I was anticipating a bunch of "we already know that, idiot" comments. Regardless, all I did was sync my safari RSS feed bookmarks to my iPhone. That's it. Done.
It appears that the reader.mac.com webstite is still a POS, even after you follow the instructions on the screen. Just find an RSS feed from Safari, bookmark it, sync it, and you will then have a really good RSS reader on your iPhone.
The RSS reader is very good. You can click (touch) on an article to read the entire thing without actually going to the page. This is something the real version of Safari RSS could take a lesson from.