As an example, here's a screengrab of Abiword running on Qemu (emulating an arm machine with an 800x480 screen) - it's set to 150dpi, which gives a readable display, but you can see it's not the most efficient use of screen space - the image has been resized to 50% to give a better indication of the size it'll be on a real device
Probably re-organising the UI into a vertical toolbar, the way
Mameo does, would give us better use
A much better way would be to copy Psion's method on the series 5xx and 7: Menus and toolbars are hidden by default and brought up by a menu key. On the Psions this is a dedicated key, but I'm certain some smart remapping could be done. Add a thought-through system of keyboard shortcuts and a seasoned user could remain in fullscreen layout practically all the time.