The only options you have is using Calibre (which I don't because I don't like toxic developers and ugly UI/code) or using a Jailbreak.

I'm doing the latter and am quite happy with my kerned and hyphenated epubs.

I suppose the idea would have to be that there are significant non-commercial sources of pdf and text documents that someone might want to read on a kindle (think documentation, academic papers, a collection of notes, the kind of things that aren't available through amazon).

However, those same kinds of documents are increasingly distributed as epubs, because PDFs are horrible unless you target one specific output size and resolution (like physical paper), and text simply doesn't offer enough layout flexibility. Epub is the open standard, and anyone who wants layout flexibility uses it. Anything else, including a lot of kindle ebooks, are typically converted from an epub original.

It's not a technical challenge. KF8 is nearly isomorphic to epub.

You won't find any epubs in the Amazon Store. That Amazon still allows to side-load other ebooks onto the Kindle is nice but you never known when that hole gets closed up.

It might not be a technical challenge for you but there many people out there for whom it is and those will go to the Amazon Store to get their ebooks there because it's easier to do. And voila, their in the walled garden of Amazon.

PDFs are targetting a different kind of ebooks, those that need to have an exact layout. Amazon is also not really supporting them well, the reading experience of a PDF on a Kindle is awful even though the Kindle DX would have a big enough display for displaying whole pages.

I think you misread/misinterpreted. I didn't say there were epubs in the kindle store, but that many of their ebooks were converted from epub format [to get them into the kindle store as kf8 or mobi]. To elaborate: You can't natively edit kf8 or mobi files (at least not with mainstream editors). kf8 and mobi ebooks therefore originate as html or epub (which are pretty much the same thing, ignoring that epubs are zipped, and ignoring simple extras like toc and cover page semantics). Kindle-supported kf8 format is generated using kindlegen operating on either a epub or html source (or some other formats, which aren't recommended because they lack formatting parity with epub/kf8). The point being, ebooks are basically in some quasi-html open format to begin with, Amazon requires converting them to a proprietary format (and kf8 is a very thin proprietary veneer over epub) to get them onto kindles... a conversion that serves no practical, functional purpose.

Which "business model" is that? Being monopolistic through their own proprietary format? Yeah, monopolies don't want to give up their monopoly power. Go figure. That doesn't mean we shouldn't be demanding that their power is reduced.

But they are using their proprietary format to promote their platform and as soon as you are in their walled garden, it's much more convenient to buy it from Amazon.

They are a content provider and they do anything that's legally possible to keep their customer and that includes a proprietary format.

Given that the Kindle is currently the best e-ink hardware that is out there and even by a big margin, they don't need to enforce anything (the Calibre plugin that removes the DRM from Kindle ebooks for ebooks) but I wonder what happens if a viable competitor turns up?

The developer has been helpful enough on the couple of times I have filed a bug.

I'm not sure why people hate the UI. The configuration UI is pretty bad, but I rarely go need to go there and the main screen works perfectly for me.

I didn't mention that I also don't need to use Calibre as I can load my epubs onto the device via wireless connection.

I also don't use Amazon's ereader software so that I'm able to read epubs without converting them and also having an UI interface on the Kindle that suits my habits better than the official one.

For these reasons I don't have a need for Calibre in the first place.