I read the book from the boat in the tree. I saved first and returned the book, but you pretty much just get a bit of experience, a possibly ok item or bit of gold. For the sake of two skill points I'd take the book; one point in Wisdom and you'd easily get more experience (and have a skill point to spare), there is lots of loot to find or buy, and gold is trivial to get once you have the tower. What's-his-name gets ticked off if you tell him you read the book, but you don't need to talk to him again (he wasn't expecting to get it anyway, so what he doesn't know will not hurt him).
For Saul, I don't know what the long term consequences are, if any (have not been back there). To release him there is a key on a bench near the cell he is in.
