The K3 at that price would make a good gift for someone who is new to Readers/eBooks or for a child/teen.
But as for being better than the H2O, no way at all. Less contrast, fuzzier, and no front light. I've used a 650 and T1 that both use the same screen. I've also used an external light for the 650 and T1 and I much prefer the front lit screen.
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