My PW3 did not pick up the time shift time before I did Jailbreak. Then, I looked and found the file /var/local/system/tz, which is the file responsible for time zones. I replaced it with the same file from Ubuntu to have proper Dst switch automatically. You can get that file even from "Ubuntu Live CD" flash drive.
If you have Jailbreak, you can do this (and there is a new JB method called KindleBreak, have a look at the first page of the Kindle Developer's Corner forum).
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