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I couldn't say what might be going on with your Touch, but I assure you that the AZW3 file you uploaded has working embedded fonts and unpacking that same AZW3 file shows that the font-files are indeed properly manifested in the OPF file. The embedded fonts work as they should in the KindlePreviewer (and the Kindle for PC app), but perhaps there is something different about the Touch.
See if giving the file an AZW or MOBI extension (instead of AZW3) makes any difference.
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