Code:
# echo 1 > /proc/sys/net/ipv4/ip_forward
# /sbin/iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE
# /sbin/iptables -A FORWARD -i eth0 -o usb0 -m state
--state RELATED,ESTABLISHED -j ACCEPT
# /sbin/iptables -A FORWARD -i usb0 -o eth0 -j ACCEPT
OK- ran these on the host, then used the tcpdump program suggested. While that was open I ssh'ed into the kindle touch, and made sure to add the default gateway. I tried to ping the local router from the kindle and am unable. tcpdump didn't show any activity? I then checked to see how tcpdump works by changing the eth0 to usb0 and see activity when I ping. I can, of course, reach the internet fine from the host (I had to install tcpdump

Thanks for advice and ideas! Any more?
edit: your script sure looks the same to me? I just can't seem to get it working. The real weird thing is that I can boot to XP and share the links just fine! I can't do a debootstrap from there, but I can do the apt-get stuff if I'm ssh'd into the kindle and chrooted.
It has to be something minor that I'm missing!? Maybe it's Debian on my host? What are you running?