Q: Converting PDF to ebook format for iBooks so I can highlight, etc.

There are countless other pdf readers available for iOS you might want to check out.  Convert pdf to other formats often does not turn out well.

So, I was having a similar issue, and I found a website: http://open.xerox.com/Services/Rossinante this website will allow you to upload your PDFs and convert to .EPUB, which is the format that ibooks needs in order to allow you to highlight and take notes as with all the other ibook format content, hope this works for you as it's working for me!

Thanks! - You got me thinking on this and I went to the App Store and there are PDF to EPUB converter apps! "The File Converter" has great reviews.  I think it's about $4.99.  Check it out!