I've just finished reading a sideloaded Baen epub (possibly converted by me from mobi, I forget) with no problems at all.
On the other hand, another file created by me from a Word document was pretty terrible, and seemed to get worse the further into the book you got. It did this before 2.0, but might now be worse. It's hard to say. This one was a single monolithic file. I have no idea how the Baen book was organised. Maybe I'll take a look this evening.
(Incidentally, the second book also had problems paging backwards from the start of a chapter, which again was happening with the old firmware, too. The chapter breaks were added by me using an old version of Sigil - my netbook at home doesn't like the recent MacOS versions, but then it's not a real Mac.)