Technical details:
PS/2 keyboard is connected to Teensy++, interfaced with PS/2 library.
Then 20 pins go out of Teensy into an breakout adapter, which converts them into kindle's 20-pin ribbon, in place of kindle's own keyboard.
Arduino code is listed in the original post and using that code I can navigate up/down/left/right/center.
I'm not sure what exactly takes place internally. That's what I'm trying to figure out. Here's the link that explains the different digital pin states:
https://www.arduino.cc/en/Tutorial/DigitalPins
They are all set to INPUT by default. In that state nothing happens. When the 5-way controller key pins (15-19) get set to OUTPUT, they work. When the other keys get set to OUTPUT, they spit out gibberish.
Let me know if you need any more details. I'll do my best to answer.