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ah, i see why you would be frustrated. that result surprises me quite a bit, to be honest. i've not made an epub from indesign so far (i haven't upgraded to the new version yet, so i can't) so i'm afraid i can't help you, but there MUST be a way to get a better result than that, otherwise i really don't see the point of integrating the feature into indesign.
just a (completely random...) guess : to get the epub, do you "save as" or "export" ? if both are available, try the other one. and see if there is a preferences dialogue box for the epub export, like there is for pdf exports. as i said, i don't know what to do, since my indesign won't make epub, but based on what i know of the app i would expect some possibility like that.
as for mobi, the epub files i've converted have worked fine (the first time, it was accidental ; i double clicked the file thinking i would unzip it that way, and it opened in mobipocket. it did take several seconds). check if you have the most recent version of mobipocket. for me, it opened like any other mobi file : it was added to the library, and it opened the file directly for reading.
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