The Hanlin and the iLiad have CHM support. In the case of the iLiad, this is via FBReader and a limitation of FBReader is that it reads the entire ebook into memory on startup. Many CHM's are very large and on the iLiad FBReader will freeze on CHMs above perhaps 5 MB. I don't know if the Hanlin has the same issue with file size or not.
Windows MobiPocket Reader will import a CHM and export a MOBI, but it does not always work well (or at all).
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