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1) It can if you also install Kobo Start Menu 8 (what you describe is how I currently do it myself).
2) The rendering engine is an improvement. That said, the real bottlenecks are probably the processor and lack of RAM, plus the slow refresh rate of e-ink screens.
That said, I believe I saw a comment somewhere on another thread that said that KOReader needs some tweaks to work with the larger display as it isn't calibrated so tapping on certain parts of the screen doesn't work. Unfortunately, the last version was released on August 23, so if that problem exists, it probably hasn't been fixed yet.
For what it's worth, I'm running Kobo firmware 4.0 on my Glo HD (it's the same version the Aura One uses) and everything works fine so far. So it'll probably run on the Aura One fine as well, once they update KOReader to work with the larger screen.
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