How does one create a value of type System.IO.Handle for reading that
takes its input from a string instead of a file?  I'm looking for the
equivalent of java.io.StringReader in Java.  Thanks in advance.

You can't. There are several libraries that purport to provide better interfaces for doing IO in Haskell, like conduit, pipes, enumerator, and my own io-streams library (http://github.com/snapframework/io-streams, soon to be released). You could try one of those.