I have come across this with a few books too, in all my cases it was caused by page number anchors inside the words. My solution was to edit the book and remove the problem anchors using a regular expression search-and-replace. Unfortunately this requires a bit of familiarity with epub editing tools.
If you can open the epub using Calibre's "Edit book" or "Unpack book" functions and look at one of the words that breaks incorrectly, you will probably see something like this:
Code:
L<a id="page394"/>ucy
(This is the word Lucy with a page anchor embedded inside the word.)
If so, then you could use a a regular expression such as:
Code:
<a id="page([0-9]+)"/>
to search and delete all the page anchors, and the problem should be solved.
Most publishers put the page number anchors between words so the problem doesn't usually occur. I have had the problem with about 5 or 6 books in the last 2 years.
Edit: Another work-around might be to load the book as a kepub instead of an epub, using Calibre's KoboTouchExtended plugin. I'm not 100% sure, but I think the kepub reader is not affected by these misplaced anchors.