Plenty more photos illustrating how to make your own pencil iPad stand over at Geeky Gadgets. Of course, if this DIY type of solution isn't your cup of tea, there's always off-the-shelf solutions that might satiate your desire for something more finished.
DIY solution is how creator Julian Horsey has taken consideration of the pencil's features with her setup. The ferrule metal connectors (the metal wring which join eraser with the wooden section) designate where the iPad should sit upon, while the eraser creates a non-slip area up top. 69 cents iPad stand, which only requires a Office Depot card holder and results in a more iPad-complementary setup.