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@BookLover & HarryT - The Amazon rep explained to me quite clearly that this is their current policy (to only allow items in collections at their discretion if not purchased from Amazon).
@Soulfuldog - Perhaps collections can be used without registering with the jailbreak + hacks mentioned here, I'm not sure, that is one thing I'm trying to determine.
I think most people just don't know about this, but if there was a broader understanding that Amazon doesn't allow you to organize personal content without having it sent to them first, I think there would be some outcry about this practice. When you buy an ereader, there is an expectation of privacy, just like with a PC. Amazon is marketing the device as an all-purpose ereader, but in practice trying to make it uncomfortable to use for anything but Amazon ebook "licenses".
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