I chose JWPce as the word processor/dictionary for Japanese studies on a Pocket PC. It works for me. The web page for the software download describes how to set it up on a Pocket PC. There are issues, of course.
Some hints to make it work better:
1) I use landscape layout, at least the screen becomes wider and less time required to close the dictionary window.
2) For moving around a text and the dictionary - I use the scrolling button on my device.
3) Setup Unicode as your default system - helps to copy/paste between JWPce and other applications, e.g. Internet Explore and Word. You can use JWPce as your Japanese IME then, since it works better for whole words then the other one I have (Effy).
4) If you want to return back to your open file, use Memory icon in settings, otherwise it creates a new JWPce session. Is it a bug?
At the moment I am reading the subtitle transcript of 千と千尋の神隠し (Spirited away) anime, which I downloaded and pasted into JWPce. I know the plot very well and it makes a rather easy read.
I'd like to hear some more experiences about using a Pocket PC fro learning Japanese.
What IME do you use for character recognition?