Earlier quoted context omitted.
The "Reader" button appears to be a fork of Readability ( http://downloadsquad.switched.com/2010/06/08/think-safari-re... ) Also of note, the original Readability was actually "partly inspired by" instapaper ( http://lab.arc90.com/2009/03/02/readability/ )
So I looked into all of these some time ago for an app that I use myself. The Safari fork of Readability is the best client implementation, while the best server-side implementation (by a mile) is Diffbot. Out of the 50 sources I had (regular RSS updates, etc.) InstaPaper failed on far too many, either stripping important content or pictures and captions. Readability was only a bit better I glued together an app that…
From your comment I expected it to be an open source implementation, but a high-quality SaaS with 50,000 API calls/mo on the free plan is still pretty damn good.