Looks great in the epub - that's what's frustrating me. And...just updated to Calibre 0.8.0.
I tried the same thing using Kindlegen -- no line-height problems, but instead an added first-line indent everywhere I don't want, no images (cover's fine), no text centering, and about fifty "Info(cssparser): @rules other than @import and @charset are not supported" messages (I don't have any. I do have @import which I'm about to can). mrrph.
I am thinking I will eventually need a separate CSS for each for the epub and the mobi; I'd think I'd feel more secure. But it's frustrating not being able to see the actual output...