I wouldn't rely on it to remove everything. Alterations to system files won't be reverted by doing a factory restore as the Kindle doesn't keep a backup copy of those around. If the hack was based around altering some setting somewhere then it may revert it when it does a factory reset.
You've got a K2 which does have complete firmware images available unlike the K3 which relies on a patching system. If you can force it to install a previous version or the same version then it'll wipe out all hacks.
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