FWIW I've hacked this to "work" by changing the CSS file for all images - limiting the size to 700x600 (its a 800x600 screen, but has top + bottom margins, so 700 was about right), while maintaining aspect ratio.
However, this all seems like something Calibre should be doing - else why does it ask what device to output for?!? Anyone got any experience? Could it be some CSS (specifying a very tall/wide image) that the Kobo Mini is handling rather literally? Perhaps other devices would let you scroll to see the whole image, it doesn't seem possible on this..
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