My friend, you miss ONE critical point:
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-then ifconfig usb0 192.168.0.102
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This assigns an IP to the usb interface of your computer!!
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I try to ssh to the kindle as root ssh root@192.168.0.102 and I am prompted for a password which I then press enter. I then get asked again and again.
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Here you try to access your own computer, not the kindle!!
The IP of the kindle is assigned to the one written in the "usbnetwork" script and should be 192.168.2.2 in the latest versions. So you should assign 192.168.2.1 to your usb0 interface.
Now try "telnet 192.168.2.2".