Indeed, as best as I can tell, the line height issue is a bug in the Kindle Touch renderer. I could not find any way to influence the line height via CSS. But there may well be some way, I have only a limited amount of time I can spend on fiddling with it
If some of you want to experiment, calibre's Tweak Book tool is a good way to do it (it now allows tweaking of KF8).
I suggest trying different types of line-height specifications: number, fixed length, percentage. Perhaps one of them will work.
If you had the tweak enabled there is no need to re-enable it, it will stay enabled after upgrading.
On justification: You can turn off justification (there is an option to do so in the calibre conversion settings), but there is no way to make the justification look nicer that I know of.