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We also shouldn't assume that the conversion has to be to Mobipocket format to read on the Gen3 because it can also read HTML. You can do a LIT to HTML conversion as easy as a LIT to LRF. If the goal is to create a library without DRM I would argue that you'd also want it in an open standard format rather then proprietary. Hopefully ePub in the future and this whole discussion is irrelevant.
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