I, too, have been using LaTeX for producing e-reader sized PDFs. If you use the pdftex and hyperref packages, you can get a working table of contents, index, footnotes,... Here's what the start of my main tex files look like:
\documentclass[12pt,a5paper,openany,oneside]{book}
\usepackage[a5paper]{geometry}
\usepackage[pdftex,pdftitle={My Awesome Buke},pdfauthor={Blow, Joe}]{hyperref}
\usepackage[pdftex]{color,graphicx}
\textwidth 128mm
\topmargin -15mm
\textheight 175mm
\evensidemargin -15mm
\oddsidemargin -15mm
You can also use '\sloppy' to reduce the amount of hyphenation.
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