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I haven't used the iTunes method, but the mobi books I send to the Kindle app on my mini (via email or Send to Kindle) are sorted last name first by author.
I have the mobi output setting in calibre set the same as you do, to get the sort correct for my Kindle, since it doesn't pull author_sort from the metadata. I think that setting is bypassed when I send to the mini via email or Send to Kindle (it's only triggered by conversion or sending to device), so you might have to untick that to get the sort right on your Kindle app using the iTunes method. Which would be a major pain if you are loading books on both a Kindle and an iPad.
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