I do this, but I manually capitalize the chosen words. Here's my small-cap style:
span.smallcap {
font-size: 90%;
font-weight: bold;
}
Of course it takes a bit of work, but I only use it at the start of a chapter. I think it's a good substitute for drop-caps. The oldest Kindles ignore the 90% instruction, but they also ignore the bold, so that works out all right.
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