Hi James,
Yep, if it's only the italic form of the font you'd need to call on, then that's all you'd need to embed. It's only if you were also going to use that same font for other quotations, or maybe for the body text, that you'd need to embed the roman and bold variants. (Was that Zelda whose code you were reading? She sure seems to know her stuff!)
For the graphic, I'd definitely stick with JPG, which any ereader device will be able to read. PNG and (especially) TIFF will cause you problems because they're not supported widely enough.
Good luck!
