Hi
I can't really argue on your points. If I was trying to sell my books, I would indeed have chosen another path and tried to meet the needs of the largest reading audience. No question about that.
Feeling no pressure...
It happens that I publish non-commercial EPUBs, so I feel no pressure for two reasons:
1 - As far as I can see, the situation is not too bad: for the time being, I already provide a fallout solution. The Kobo displays the six inch PDF exactly the way I intended - Too bad for the unlucky Kobo Mini users...
2 - These books will be here for a long time because they are classical books. They will not be out of fashion next year, they are already out of fashion. And dropcaps have been around for centuries. They will survive this period.
Meanwhile, the current technical limitations of the Kobo will very probably not be eternal.
As an example, remember some years ago, people said:" if you publish for the IPAD, you cannot embed fonts." Well, Apple changed its mind. Currently it seems IPADs (or better said iBooks) does not seem to display nnbsp. Should we stop using them for this reason? This situation can change overnight.
Look for fonts: not long ago, people argued that, for ebook readers, we should discard the old print fonts and switch to web optimized fonts (like Georgia), for hard fact reasons. Now, people begin to realize that old fonts can also be used because the screen resolution on nearly all devices has been vastly increased. I also enjoy using Garamond on my - 213 ppi - Kobo screen.
These considerations apply also for dropcaps. This is a philosophical question, not a technical one...
... but looking for a solution
If I feel no pressure, it does not mean that I do not care about how easily the reader can read them now. It happens that I have just been aware of this Kobo dropcap problem for some days (I bought a Kobo Glo) and I am looking for a solution.
I already have to discard one solution proposed above: I will not use only one single font for body and dropcaps for a plain reason: I tried it already, and the resulting display is not nice nor elegant. The Linux Libertine Display font has been optimized for the display of big size characters but it's much too light-weight to be used for regular display. It would be a pity not to use it for what it has been intended for.
Up to now, I try to understand how Kobo deals with embedded fonts. Are there any quirks regarding font-family names? If I have to change some names, I would gladly do it, as far as it does not trigger any collateral damage.
If you found a solution to display fancy dropcaps, I would be keen to learn it (hoping these dropcaps are not just images).
Finally, it seems there is also one thing that makes a correct display of EPUB dropcaps more difficult. You need to recreate the exact original balance for the three cursors (size, line-spacing and margin) if not the dropcap will not display as planned as it seems that these Kobo settings take precedence over the EPUB CSS values (but for EPUBs only, not for PDF)...