I did some more checking tonite and there is a fifth thumbnail created. This is the one used for the sleep and power off screens and is 800x600 and does not get created until you open the book.
I did a test and what seems to happen is that the KT will leave an 800x600 image untouched ( except for dithering to grayscale ) but the width of the smaller thumbnails is squeezed to match the proportions of the particular thumbnail. Because the amount of distortion is small it is very difficult to detect.
I have not tried any cover images at other dimensions or proportions yet, for example 600x600 or 729x544.
NOTE: this firmware (1.9.10) uses a new algorithm for creating the thumbnails.