<p>What are release notes for and who reads them? Should/could they be automated by just spitting out bug fixes for the current release, or do they warrant careful human editing? 
So, anybody with a link to best practices(reasoning behind) in regards to software release notes?</p>

This really depends on who your application is built for and your organizations goals.  However, I tend to believe that release notes need to be a concise listing of important key additions, enhancements, or fixes that are included in the particular release.
Sometimes a simple dump of the bug tracking system information is enough, other times, I find that they need to be refined.
The key is that typically Release Notes are believed to be the "Hey look at what we did" type listing of changes.