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It is hard to say for sure without seeing the converted book's html and stylesheet, but my guess is that the problem is caused by Calibre adding the 1.5em indent to the first paragraph during the conversion.
To compare like with like, try converting epub to epub with the same settings and view the converted book with Calibre, that way you will be able to tell if it is really a difference between the H2O and Calibre viewer, or a problem with the conversion.
My experience is that there are many, many things that go wrong during Calibre conversions, so it is best to avoid converting if at all possible. You can use the KoboTouchExtended driver to send the original epub to the device as a KePub instead of converting to KePub within Calibre, as that will avoid the Calibre conversion process.
If you must convert then you will probably need to go through the book and manually edit it to fix up all the problems that the conversion causes.
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