I'm trying to see if I can figure this out too. I notice that if you embed a PDF the EPUB doesn't validate. Something about hyperlinking to non-standard resources. This page seems to be explaining something about having a fallback method:
http://idpf.org/epub/20/spec/OPF_2.0...htm#Section2.0
It's over my head though. Anyone have a working example they could share? And any ideas if it'll work when the file's converted for Kindle?
I'm new at this stuff and probably shouldn't jump in so far over my head. It's fun though. :-)
Thanks, Phyllis