Oh, darn.. I finally put my reading glasses on, and the micro-SD card I was using is only a Class-4 card.

So I've gotten out a full size Class-10 SDHC card to try now.
The read speed I get is 12.8 MBytes/sec. That's fast enough
to play media from, by quite a margin.

The internal N7 flash read speed is 45.6 MBytes/sec.