I freely admit that I really, really don't have the technical know-how to even begin to find a solution to my screensaver problem. (But if you need advice on international arbitration, I'd be all over it.)
I tried installing Yifan Lu's simple screensaver hack as suggested in the KT wiki page (after carefully making sure all my custom screensavers were properly named and formatted), but no luck. It seems to download from the USB drive onto the Kindle fine, or a least I get "update your kindle" option on the settings menu. Then it restarts but eventually I get the "update unsuccessful Error 3" message. I tried to figure out the explanations of how to fix that error, but frankly got lost in the jargon. So I'm going to keep searching here and the rest of the internet for a fix, while hoping that some kind, generous, and non-judgmental developer here will come up with a simple solution to rescue us ignorant non-techies.