I have read through some of the threads re: Instapaper and Kindle 3, but none of them described the behaviour I desire.
I would like to see the following: Articles starred in google reader are automatically synced with instapaper. Instapaper syncs once per day with the Kindle. Articles are broken in to sections per website which can be seen in the "sections and articles" list of the periodical "instapaper". The previous day's instapaper is sent to "back issues".
InstaReader purports to be able to sync google reader starred items with Instapaper, but after some time waiting my accounts still are not synced. I will wait a little longer before seeking an alternative.
Instapaper itself is able to send unread articles to the Kindle, however, it only sends up to the most recent 20, so an alternative must be found. In addition, Instapaper does not break up the articles into separate sections.