i don't edit the HTML file per se (don't really know how to). i format a book in Open Office to the best of my abilities and then export it to HTML, from where i use mobipocket creator.
i needed WordPad to see the "attribute" field, which in my case is not "mobi" but "western". otherwise i use h1 and class for the other two fields.
and yep, so good to have a navigable TOC!