Think I have solved this myself. For posterity, the solutions to my two issues;
- Indesign was putting the img tag within a <p>, and by default paragraphs come with some padding. To fix it I just put in my CSS files that the <p> class in question should have no padding. Job done.
- Came across the solution to the iTunes cover problem when messing around with the cover file for the issue above. Basically I found that I had to remove the ampersand from the image file name (and also from wherever it was referred to - that didn't seem 100% consistent, which was perhaps part of the problem) and also reduce the physical dimensions of the image. I reduced it to 600x860px and it worked, but I haven't experimented to see what the acceptable ranges are.
Have a good weekend everyone!