You need Calibre to convert DRM-free ePub to DRM-free MOBI. The dictionary works on DRM-free MOBI on the Kindle, but you can only sync Kindle-store ebooks across Kindle devices and apps.
Calibre only format shifts DRM-free ebooks, but the tools_v2.2a bundle includes 3rd-party Calibre plug-ins to strip DRM from Adobe and B&N ePubs during the import proccess. See Apprentice Alf's blog, and don't forget that it is now over multiple pages.
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