Nick, thanks for your response.
I purchased a Kindle 2 recently, and have read this forum thread through. I too found that Kindle 2 would display a blank page every 2 pages (I used mobi-prc, landscape-half to convert, so every 2 pages means 1 orginal page).
I tried to use Calibre to create .mobi file from the temporary .html and .png files generated by PDFRead, it does NOT have the blank page problem. However, the TOC link does not work: Click any link, it will jump to end of the book.