They only kind of support epub - you can now email a drm-free epub file to your "Send to Kindle" email address but it will be converted to a different format before being sent to your device.
You still can't load or read epubs directly on Kindles.
You still can't load or read epubs directly on Kindles.
To the average reader, does this have an negative impact?
This doesn’t appear to be true. I have several non Amazon epubs that I sent using the web interface, all with covers.