Thanks for the info, Larry.
Unfortunately, changing the resolution to 530x355 hasn't made any difference. I have noticed that one of the edited ePubs I've been using to test this has what looks like a page number in the bottom right of the kobo-produced cover image:
Others I have been testing turn out exactly the same, with identical white borders, only without that number. Some sort of border is certainly being applied, but I have no idea why or how; it has to be outside of the html. Any ideas?
Can anyone link me to a non-copyrighted ePub that they know displays correctly (fills the screen) on their Kobo Touch?