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I don't have a H2O but I have the Aura HD, its immediate predecessor. Absolutely love the thing. Haven't had any problems except for a firmware bug that has made reading some PDFs on it almost impossible. However, that was never my primary use for the device.
I've read any number of side-loaded books without issues. I've read any number of books purchased from Kobo, again without issue. The majority of my side-loads have been library books furnished by Overdrive, and I've never had a problem.
In addition my dealings with Kobo customer service have all been resolved in a timely fashion to my satisfaction.
If you're leaning towards a H2O, I encourage you to buy one. It's what I'll buy if my HD ever bites the dust.
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