When you enlarge the image, have you tried to zoom out (pinch zoom on the phone)? I haven’t checked in awhile, but I always avoided the enlarge image action because it always zoomed in too much for images.
Also, could you try changing you action to web view or open link? I’m not sure how that should react since you are viewing a PDF instead of an image. Changing the action might work better for you.
As for the close (x) button, I know there was an issue in the past, but may have been resolved. i don’t have an iphone, so I’m not sure how that works for iphone users now.