I have had pretty good luck converting PDF's via MobiPocket Creator. I have to sometimes edit the metadata to get the tittle and author to be correct, but other than that I have had good results. It is a hassle though and I was hoping the Kindle 2 firmware update would good enough that I would no longer need to bother. It looks like that is not the case which is unfortunate.
I can begrudgingly handle the conversion process but my deep down secret desire was to avoid having to teach my less technically proficient relatives how to do it.

I will find a way to handle it, but I was hoping the new features would render that unnecessary. I guess I can stop clinging to that futile hope and just resign myself to reality of the situation.
Thanks to everyone for helping me better understand the situation, I appreciate it even if the answers were not what I was hoping for. lol.