I assume other firmwares do read the longer files correctly. I would think it wouldn't be that hard to fix (for those who know how), but I don't know why the problem exists to begin with.
Now that I think about it, I think the Sansa firmware supports mp4, and maybe m4b as well. The Fuze model has a separate category for audiobooks too (which is new since the e200s). I'll have to check that...