Does modern CSS allow for server-side font embedding?

Depends on your definition of modern.
Here’s the code:

<style type=“text/css”>
@font-face {
font-family: “My Font”;
src: url(myfont.ttf);
}
.header {
font-family: “Ace Crikey”;
}
</style>

However, it is my understanding that this validates under CSS 2.0, and will validate under CSS 3.0, but does not validate under CSS 2.1.

EDIT: This page looks like it offers some solutions to the compatibility problem.

The answer is no. CSS 2.1 removed embedded font support due to copyright complaints, so browsers haven’t really implemented it. It’s supposed to come back in CSS 3, but I wouldn’t hold my breath.

While not ideal.. Have you looked into sIFR.

You can do it with PHP if you have to as well. It’s really a snap, but it takes away C& because it’ll render as an image :/