As an aside, its this sort of thing thats left me with an irrational hatred of PDF's...
http://www.thenakedscientists.com/fo...?topic=47328.0
http://superuser.com/questions/16618...s-x-and-ubuntu
http://apple2online.com/index.php?p=...ding-pdf-files
It seems to be a known thing - they tend to only work with Adobe. Since 256bit was introduced with PDF/1.7 my guess is Kobo, like Apple and I would hazard a guess many others, don't support PDF/1.7. As this doesnt seem to be an isolated thing - my guess is licensing costs against supporting a handful of documents.
My other guess is Kobo (and probably Apple etc) would answer 'Convert to an earlier PDF format'