Well, here's the verdict. After all the editing and formatting, my newest book is 502 pages, which makes the spine about 1.25" wide. The binding seems pretty strong. I'm happy with how it feels. I have handled it quite a bit going through it page by page looking for formatting problems, etc., and I have noticed it is starting to show a little bit of a crease in the middle of the spine. It's not horrible, but I suppose with a lot more handling it could get worse. It doesn't feel like it's going to break or anything, but it's not exactly eye pleasing.
I have spent quite a bit of time looking through different printers who offer hardback books, but, unfortunately, I didn't find a single one that had hardbacks available for under $30 a book, and most places you had to order at least 50 copies or more.

So, I'm not sure we have many options beyond what we're already doing unless someone comes up with a good place for hardbacks.