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Just noticed something wired and important:
You checked the subnet of your eth0 interface? It is 255.255.0.0. . That means your computer thinks the ip range 192.168.0.0 - 192.168.255.255 is behind your eth0 interface.
Now I would recommend using ip address like 10.0.0.* for your "Kindle" Network.
So change the addresses in the usbnetwork file to 10.0.0.1 and 10.0.0.2 and assign your usb0 interface the address 10.0.0.1. Now try to telnet to 10.0.0.2.
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