Once the DRM is removed from an AZW, the result is a MOBI ebook. So there is no need to "convert" it to PRC, just rename it to .prc or .mobi. Recent versions of mobidedrm.py can be used as a pre-processor for Calibre, and in this mode any .azw you import will automatically end up as a DRM-free .mobi.
Have you tried Calibre's
Paragraph spacing options? This (Remove spacing between paragraphs) should always work unless there are hard page breaks in the original AZW ebook.