This step is quite easy. All you need is an Exacto or utility knife, a straight edge, and, of course, the Leonardo address book, available for $155 from Jenni Bick Bookbinding http://www.jennibick.com/alphabet-address.html
Update: last night I found a less expensive source -- Strawberry Hill, http://www.strawberryhillhome.com/022-04.html
They sell it for $105, $50 less than Jenni Bick Bookbinding.
Here's what you start with: the Leonardo address book with the address pages attached.
To remove the bound-in address pages use a very sharp razor knife and using a straight edge as a guide, cut along the folded seam where the outer cover paper is glued to the leather cover.
The leather cover with the pages removed.
Another view of the cover with pages removed/
Next trim back the excess paper from the address book lining the insides of the leather cover so that none protrudes beyond the plane where both halves of the leather cover fold over the center.
The Leonardo cover is now ready for the next phase of work -- taking the cover apart and re-gluing it to make it fit the Kindle 2 better.