I'm not sure if this helps, but I came across with a similar problem. I was producing pdf slides in LaTeX. The file was ok in preview and Safari without embedding, but was rotated as embedded in iFrame and object environments.
I opened the pdf in Preview in OS X, and saved the file as such. Embedding the saved file works perfectly.
Thanks for the response. Our temporary solution was to detect versions of Safari we knew to have the problem and perform CSS rotation. A few weeks back, however, we noticed that some PDF's simply weren't subject to the issue -- and I think our production team found a flag or procedure to run the PDFs through that eliminates the issue.
Thanks for posting some well-defined steps to solve the issue!