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Note that LIT and MOBI (PRC) were developed at about the same time, and both are variants of OEB. LIT is almost pure OEB in a MS wrapper. MOBI starts with OEB and tries to make it simple enough to render on very low end devices, but the intent was always to use OEB as the archiving and editing format. You can't even import PRC files into MobiPocket's tools. So LIT to OEB to MOBI makes perfect sense, and is exactly what MobiPocket wants you to do (without the LIT detour).
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