What you want is lit2oeb. The Open EBook format is based on HTML, and a simple command of "lit2oeb -o newdir Book.lit" will create a "newdir" and put the HTML in it.
You may discover that the line-break issue is not a CSS issue, but the presence of BR tags. If so, you'll need to edit them out, since a CSS override won't be able to deal with them.
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