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Doesn't appear to be the firmware update. I'm still on 2.3.3 I did de-registered and then re-registered my kindle and directly after the re-register I had full internet access (this doesn't appear to work for everyone though). I'd be surprised if it lasts - I expect it's an oversight by Amazon and once they realize that the job which updates their proxy server has stopped running the blocks will be back in place.
As for RSS feeds - I've tried google reader, and that is slow, it doesn't appear to finish loading the page and stops with a warning message about the loading time. There's a sticky thread above about RSS.
For what it's worth, I went through the same questions before I bought a reader, and decided on the kindle. I use the Calibre software to convert / load non-amazon books on to the device. That works very well. Wikipedia works very well. Most of all though, it's a pleasure to read on, and anything else is a bonus. I wouldn't swap it.
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