I've had great results on all sorts of texts, and text with graphics, with the following:
First of all, start with something *other* than a pdf file. The exception would be if you own Acrobat, then you can convert the pdf to plain text in many cases (as long as the pdf isn't just a collection of images...).
Open your file in Microsoft Word and take a good look at it. Often you can spruce things up without too much trouble --- you might even try doing an "autoformat" on the text and see if that helps. You can always back out if you don't want to work with the results.
Once you've got things looking reasonably half-decent in Word, save your file as an html file.
Open the html file in BookDesigner and do some further editing with respect to titles, author, subtitles, table of contents, etc., until you've got it the way you want it.
Save the results as a "lit" file. This is important. Libprs500 works especially well with "lit" as the import type.
Open up the lit file in libprs500 (latest version!), make some minor adjustments (I like to have libprs500 insert a blank line between paragraphs), and convert the file over to an lrf file. Libprs500 also gives you the option to save both your lit file, the lrf file, an opf file, and a jpg or some other graphics file to a single directory for storage and/or later use.
I've done about fifty conversions in the last two weeks, including some truly *nasty* un/poorly formatted stuff, and everything has come out great. Kovid Goyal has done an absolutely fantastic job on libprs500, and BookDesigner is a must-have as well. The only thing I'm wishing and waiting for is for Kovid to implement a complete conversion/export option to .epub. He certainly has the brains and ability to do it!
As a postscript, a great tool for cleaning up and formatting text is something called Interparse4. If you google it you can still find it out there...
Tim