It seems that if the book specifies full justification internally then that overrides the kindle's settings. At least that's what I read in another post somewhere, and it definitely seems to be the case.
I had a book that I'd converted from epub to mobi and it was still full-justified on the Kindle even after I'd changed the setting in the reader.pref file to "left". I went back to the epub, changed the justification in the stylesheet.css file to "left" , then re-converted it to mobi. After that the book displayed left-justified on the Kindle.
Of course if you've got a DRM'ed ebook and don't know how to liberate it, you're screwed; no fiddling around allowed.
And back on topic, big thanks to those who explained how to decrease the margins. The K3 is my first Kindle, really liking it so far, and this makes it even better.
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