I had the same problem which started only recently. I think it has to do with Flash Player's recent updates.
I updated to Reader 10 and also the latest Flash Player direct from the Adobe site and the problem was solved. Resolution went from barely readable even expanded to crystal clear with default settings. I was using Reader 9 and it was telling me there were no more updates. My guess is that recent updates to Flash Player were not compatible to Reader 9.
Anyway, I think this will solve your problem.
Great - thanks.
Updating Flash Player has no effect whatsoever on Adobe Reader or Adobe Acrobat. Both have an internal copy of the Flash Player kernel which is updated only by patches to those programs, not to the desktop or browser plugin versions of Flash Player itself.
Then perhaps it was just Reader 10 that corrected the problem. In any case the text went from squiggly almost unreadable to perfect.