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A PRC file can indeed be a modern Mobipocket format - eg all the ones that I've uploaded here at MR are. It just so happens that the ones used by Baen specifically are not; they are a very old version of Mobi that doesn't have any metadata other than the book title, doesn't have hard page breaks, and many other restrictions. It's a Baen-specific issue; most PRC files you download elsewhere will be just fine.
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