There's actually a lot of research into incidental vocabulary acquisition through reading. Interestingly, it's not as affective as simple bilingual association in immediate or long term rention.
Context of use and lexical understanding can only go so far without L1 confimation of the meaning. I've read that the benefits apply only to high intermediate or advanced students.
Here's an article based partly on that (computer based vocabulary acquisition through context) if anyone is interested.
de Groot, P. (2000). Computer assisted second language vocabulary acquisition (article):
http://llt.msu.edu/vol4num1/groot/default.html