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A little bit late
But, Have you tried Calibre with Instapaper?
It downloads much more than the 20 articles and with more images than the default Instapaper version for Kindle, but you need to make the adjustments so Calibre send the Instapaper result to your Kindle.
In every other aspect, It works just like the way you want.
About the syncronization with Google reader, I don't know how to do it.
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