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For me, the legibility issue alone is enough to make me not recommend the update. The disappearing dots just pounds that nail in the coffin.
However, shamanNS's advice seems soundest, to make sure you can go back to a previous version. You really have to test out the update for yourself to decide if it's worth it.
The other thing you could do is go to a Best Buy or Staples and pick up the latest Kindle and look at the new UI.
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