To read the fictionwise multi-format books on my reader I'm currently manually creating lrs files and then using lrs2lrf to compile them.
It takes about 30 minutes to convert a decent length book by hand.
My process is :
Download the Microsoft Reader version of the book (DRM free ones only)
Use convertlit to extract the contents to html
Using PSPad (a nice free text editor) clean up the text to remove html stuff, blank lines, extra spaces with search and replace etc.
Copy each chapter one-by-one over to a template lrs file I created.
Compile the lrs file using lrs2lrf.
It's a lot of work but the results are great - nice paragraph indents, able to resize the text, able to bookmark pages.
I currently playing around in php to see if I can automate a lot of this (although I stumped about writing out em-dashes to a text file - any ideas would be appreciated).
Ultimately I would like to be able to upload the extracted html file - mark the chapter starts and have a nicely formatted lrs back ready to compile.
btw PSPad is a great editor it has some nice features like automatically removing redundant space - automatically removing all html tags.