In the night the lowest brightness setting on iPad (1st gen) is still too bright.
Is it possible to set it even lower somehow?
On iBooks it's possible but it works only on iBooks itself and not on whole iPad.
running the latest iOS 5.1
Many people use the black on white mode to invert the color mapping for applications that will not specify more of the LCD to be grey or black and less of it white. Some blog articles call this "night mode" but it's a typical adjustment for people that have different visual abilities.
Settings App -> General –> Accessibility –> Triple-click Home -> “Toggle White on Black.”
Even though you can't reduce the illumination of the lights in the iPad further without a jailbreak, you can use this system setting to increase the amount of light that gets blocked in many cases by triple clicking the home button.
Also, many apps are being programmed to only draw in night mode where only red pixels are used. This also cuts down on the transmission of colors that our eyes use to constrict pupils and preserve night vision. This isn't a general solution, but for apps like Star Walk - this works very well in practice.
Depending on just how much you want the brightness lowered, you might consider applying a screen protector to the iPad. Reviews of the Splash Masque Screen Protector in particular mention that the display seems slightly darker when the protector is applied. The reviews take this as a negative, but if that's the effect you're looking for, you could exploit this side effect for your advantage.
In the absence of a non-jailbreak software solution, a hardware solution might be your best bet.
On a jailbroken iPad, you can use SBSettings to lower the brightness even further than the arbitrary lower limit that iOS normally allows.
Without jailbreaking, you can lower the brightness beyond the settings limit only in the iBooks app (as you mentioned), not system-wide.
The ipad generation 1 has an LED backlit LCD, so if the hardware supported it, it could go lower (if it were CCFL it would have a limit before it turned off completely).
However, the backlight hardware simply doesn't let it go lower - similar to the iPhone 3GS. Remember that when they came out you could only change the brightness in Settings, and Apple didn't provide nor see a need to dim them further until the iPad became the success it was, and people complained that the minimum brightness was too high.
iBooks includes a workaround specifically because people complained about brightness issues when reading in the dark. Once you try to go below the minimum supported backlight brightness, ibooks starts to decrease the brightness of the screen simply by using darker colors. You can see this by setting iBooks very low on a gen one ipad, then taking a screen shot, then setting it very high and taking a screenshot. The actual image is darker.
I haven't played with SBSettings to find out if it actually causes the backlight hardware to lower the brightness (which, despite the hardware not supporting it, is still possible if you get the CPU to PWM dim the backlight itself - but it costs you CPU cycles) or if it modifies the video driver to reduce the color space so that all apps appear dimmer.