For optimal result I rework the jpgs. It's very easy to do this in Photoshop.
You create a new action, resize picture to 768px x 930px, set to grayscale and set auto-level/auto-contrast.
This action you can batch on a folder so that all pictures in that folder are automatically converted by the action you created.
Afterwards just use the iLiad word template you can download from the iRex site and remove the margins and import the pictures and finally convert to PDF.
The only thing that is a pain is to import the pictures one by one, but I am looking into a way to automate it.
The result of this process works for me. See: http://www.mobileread.com/forums/showthread.php?t=9030