There seems to be Hyphenation support but not on by default. (I downloaded and tried.)

There is absolutely hyphenation support - you can toggle it on or off in settings, but it is off by default.

It's odd that your first and most prominent screenshot has such bad typography:

  regulation       the       circulation.

Bad typography is my main quibble with the Kindle app. It's been awful for years.

Have you looked into a better flow algorithm, such as the Knuth/Plass [1] algorithm from TeX?

[1] http://onlinelibrary.wiley.com/doi/10.1002/spe.4380111102/ab...

That screenshot has justified text, you can use left, right, and center alignments as well.

That's not really a solution. That will create an awkwardly ragged right margin. Justified text is more readable and makes text look less messy.

I like the Knuth/Plass technique as well, it creates much more uniform and visually appeasing line margins. The reason something like it would be so difficult to implement is that it requires heavy geometric processing every time the content reflows, which would impact Hyphen's performance a lot. Another issue I see is that it would pollute an ePub's DOM more than I'd care for.