Except Project Gutenberg has already put its books in MOBI format, which is supported by the Kindle.

Also, did you read the article:

"They took the text version, stripped off the headers and footer containing the license, re-wrapped the sentences, and made the chapter titles bold,"

That does not exactly sound like strenuous editing and curation.

Are they properly formatted for the Kindle, though? In the Gutenberg-derived version of Moby Dick that I read, they capitalized words italicized in the original, and replaced £ with L. Aesthetically displeasing, to say the least. I'd pay a dollar to avoid the bad results of storing masters in a lossy format (which Gutenberg's masters seem to be, although I'm not sure about this), but I rather doubt that this can be had for just a dollar.