I was describing this hack on my blog http://swiatczytnikow.pl/ukryta-funk...za-interlinie/
(it's in Polish) and I was a bit surprised it's not covered anywhere on Mobile Read.
K2 had 9 values of line spacing (1-9), which could be changed with the shortcut: ALT+SHIFT+<number>
K3 dropped the keyboard shortcut and left only 1-3 values in the Aa menu ("small" was 1 and "normal" was 3).
However it's possible to set bigger line spacing values in K3. Just edit the file: system/com.amazon.ebook.booklet.reader/reader.pref and change the value: LINE_SPACING = 3
to whatever between 1 and 9.
Then unplug and restart the Kindle, just as it was in case of justification and margins hack, e.g. http://www.mobileread.com/forums/showthread.php?t=99661
Here's how the text looks for the LINE_SPACING = 4 which I prefer:
PS. The hack does not work on Kindle DX (2.5.8) and it seems DX has no way to change line spacing (no keyboard shortcut as well)