Breaking news! I just finished the iPad cozy. Here it is, with the iPad in it. I made a giant Elizabeth Zimmerman 1 row buttonhole on each side to create handles.
The gauge is tight but that created a dense fabric that has the body to support the iPad and also to provide some cushioning. I don't think it is suitable to carry the iPad around a lot but it is nice to carry around in another bag that doesn't have cushioning.