1) Auto-conversion does it according to presets, which you may be able to tweak to a certain extent, but tend not to provide the same degree of control over the finished product as using a dedicated tool and writing your file to meet its expectations. Mind you, "control" is relative, given how buggy KindleGen tends to be.
2) Use KindleGen. The core of it is a modified mobigen, which was the backend of Mobipocket Creator. Mind you, one of MBPC's advantages is that apparently it does a pretty decent job of PDF conversion, if you don't have a good OCR program, and can use it to get a not-too-shoddy base file to clean up less than you might otherwise have to.
3) Text editor all the way*. I used to use mainly Smultron when it was open-source and free via Souceforge (still available at their website; I might spend the $5 the developer asks for the newest version if it really does fix up the Snow Leopard bugs). Slowly switching over to BareBones' proprietary free TextWrangler.
Hope this helps.
* I'm cheap and picky about how my underlying source is formatted, which I understand are not universal traits.
Last edited by ATDrake; 05-02-2011 at 04:22 PM.
Reason: Greengrocer's apostrophe.
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