Gotta admit, ABC does good work with it's Amber CHM Converter. I've been re-formatting a bunch of ebooks on Embedded Linux over to PRC so I can read them on my Cybook.
For me, the process works best if I use CHM Converter to export to Word .doc format, then do any clean-up needed on that file (CHM Converter doesn't always recognize the Previous/Next buttons and occasionally leaves them in.) and then use Mobipocket Creator to create the .prc file.
I've got a couple of rather large ones, complete with large images (which it has re-sized nicely) that are actually rather readable on my Cybook. Good thing too as I was getting a crick in my neck from all the squinting at my PC's screen at the small font - CHM never seems to display the fonts and sizes I prefer, and they change from .chm to .chm file. Obviously, this problem disappears on the Cybook.
While I won't say that a 6" screen is the be-all and end-all for reading these ebooks, it works for me.
Derek