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Don't let the lack of compatibility scare you away from the Kindle 3 - Calibre is an outstanding piece of software and can readily convert most anything into K3 readable formats.
PDF compatibility is a little shakier. Calibre can convert PDF to MOBI files, but you lose pictures and formatting. For shorter PDF files (I like to read think tank reports of 100-250 pages, for instance), the K3 can read them pretty well without conversion if you flip to landscape mode, though the form factor obviously doesn't work as well. Perfectly sufficient, though, for shorter reads like those reports.
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