Thanks for the kind comments! I'm planning to add keyboard support and a mouse emulation, but that may take a few days. Then it would be feasible to use this to get a "full blown" desktop that you can use on the Kindle only. Not terribly useful when having a USB connection, but for Wifi, it would be a nice feature, I think.
Also, password support is still missing. So your server must be configured to allow access without password. That may not be desired in your Wifi network... I think giving the password on the command line (or in the launchpad config file) is the best approach to this problem. That's probably the first thing on my list now.
TinyApps.Org: There shouldn't be all that many roadblocks, but admitted, the setup is a bit difficult to grasp on Linux. Personally, I'm using the ArchLinux distribution, but I would recommend that only to people who are experienced on Linux. On Ubuntu, the vncserver seems to come with its own wrapper script and config files.
Maybe it's easier to start with trying to just offer the current desktop via VNC. You can use "x11vnc" for doing the first steps, it will let you test things well enough, I think.
x11vnc -rfbport 5901 -forever
in a terminal should get you going (on the Kindle, press "Shift V U" for connect via launchpad).
You will need to edit the launchpad config when connecting via Wifi. Also, your PC's firewall must be configured to allow access. A shotgun approach to that would be to do this as root:
iptables -I INPUT -p tcp --dport 5901 -j ACCEPT
For USB networking access, your USB networking must be set up properly. If you cannot get shell access (via SSH/telnet), then you have to do more research on that issue.