Hmm that's a difficult question. I personally use HTML. While using HTML it is important to keep in mind that while you are trying to reproduce the look of a paper book, the fact is that ebooks are not pbooks and sometimes it is necessary to compromise to accommodate the limitations of a reflowable format. A reflowable document will never be as beautiful as a fixed page size document.
Coming to specifics:
1) Use "semantic" HTML as far as possible. For e.g. use the code
<h2 class="chapter_title">Some chapter</h2> instead of just <h2> or even worse a <p> tag.
2) When specifying sizes and positions use % values whenever possible.
3) Use logical font sizes like large, x-large etc instead of actual numerical values. In general the less specific the font information the better, as I feel this is something that should be at least somewhat under the control of the user.
4) Use minimal markup. If some feature needs a ton of markup to accomplish, it may be better to find a alternative representation that while not being absolutely faithful to the original still preserves the meaning.
5) There is the question of metadata. For this at the moment I would recommend just a simple .opf file.
These are what come to mind at the moment. Feel free to ask questions. I took a look at your sample, it does look very nice on the screen. I've attached the resulting LRF from a "default" conversion without using the advanced features of html2lrf (you can view it using the LRF viewer that is part of libprs500, if you dont have a sony reader). As you can see it already looks halfway decent. With a little bit of cleanup of the HTML you should be able to produce a pretty good LRF.