Yes to conversion quality. For example, the official extension has a huge problem with detecting the cover. I fixed it with KTool.
I also implemented custom parsers for many sites that use a “modern” frontend framework (read: SPA)
And here is the main difference: ability to send RSS feeds and newsletters to Kindle, combine them into only 1 ebook and read at a specific time you set.
I think it’s better to compare KTool to other alternatives like p2k or instapaper. The official extension did an OK job if you don’t need any features above.