Well, the problem with subsetting was user error. I tried copying the small cap glyphs to replace the lower case glyphs and in the process managed to break something. I tried again, this time just copying the small cap glyphs and pasting over the lowercase and all worked well.
The only way to get "real" small caps is to use a small cap font. I normally embed the fonts in the book since I want to achieve a specific look and layout. Subsetting the fonts results in a very small increase in file size.
This is my first foray into fonts and such. At the same time I'm looking at using SVG images to achieve controlled page layouts. Even in ebooks there are times when you want very specific page layout.
This is going to be fun!
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