After seeing these responses, I did a little reading on Kobo EPUB Guidelines and discovered that images with both width and height properties can be distorted on the Kobo. The original AZW3 file had a lot of invalid coding, as pointed out above, including a bunch of empty divs trying to use "page-break-after:always" (which was NOT working). The file also had only one HTML (unsplit) and used all inline styles rather than a stylesheet.
The solution was to convert the AZW3 file into a new EPUB and let Calibre split it. Then edit the CSS in the stylesheet to remove all width properties from any image styles. This not only fixed the image aspect ratio problem, but now page breaks are working properly, as well.
It's interesting to see how the two devices—Kindle Paperwhite and Kobo (received recently as a gift)—handle ebook files so differently. I prefer the freedom of the Kobo (tired of jumping through hoops to get my books to work outside of the Amazon universe), but the Kindle does seem to be a lot more forgiving when it comes to reading code.
Thank you all for your responses that led to a working solution. Still learning!
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