Yes, all the Kobo devices support CBR/CBZ. And that sounds like the best format.
As to the problem, the missing pages usually mean there is an error in the code. A mismatched opening and closing tags can prevent the device from showing anything in the chapter after that point.
For the display of the images, chances are they are being displayed as the code says. If there are no sizing attributes in the image tags, I think they will be displayed at their correct size. I am reading a book that has an image at the start of each chapter. The code is:
Code:
<p>
<img src="images/ffdl-07.jpg" class="pic-center">
</p>
and:
Code:
.pic-center {
margin-left: auto;
margin-right: auto;
clear: both;
display: block;
}
That centres the image on the page at its full size.