It is up to your discretion when to use <cite> or <i> for a book title in running text. Either is fine, and using <cite> is not mandatory.
It’s worth noting that <cite> renders the text inside it to appear Italic. Therefore, I would only use <cite> for the book title “Covering Islam: How the Media and the Experts Determine How We See the Rest of the World” and not the entire citation.
In an EPUB, using epub:type semantics and any applicable ARIA roles would identify this text as an endnote or footnote. For example, the running text that links to the endnote would have a superscript number with the epub:type=”noteref” and role=”doc-noteref”, where as the endnote citation itself would have the epub:type=”endnote” and a link back to the text that has the role=”doc-backlink”.
Footnotes are similar but use an <aside> tag with the epub:type=”footnote” and role=”doc-footnote”. The <cite> tag becomes less relevant in this case, and <i> can be used to style the book title.