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Well - I've done both. When I backed up my Collections via Kindle Whispernet and then pulled them to the new Kindle, it did okay but for some reason there were about 5 or 6 collections that were missing. I never took the time to figure it out, I just manually added them.
The last time - I decided to see what would happen and I copied the collections file from my K3 to the new Kindle, then used Calibre to dump almost 1200 books on there all at once. Then I plugged the Kindle into a wall socket and didn't touch it for a full 24 hours. It actually worked great. Everything indexed and all the collections were intact.
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