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I've bought books from Kobo and they've always been well-formatted. They're actually not US based (I get charged a very small international purchase fee on my credit card, between 1 cent and 11 cents, depending on the amount of the book).
The Kobo iPhone app is fine, I doubt you'd have a problem with that if you read Stanza on your iphone, but there are tools available to convert it over to another format.
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