They could have given permission to distribute a document without restriction when the fonts are embedded in it, and everything would have been OK.
What if I want to distribute a document containing the embedded fonts while imposing some restrictions on the document itself? Would I be able to do that if you only give me permissions to distribute the document without restriction? But maybe I'm mixing up without restriction and without restrictions
In the end, you are right, this is indeed a perfect example why it should be the lawyers who do the wording of licenses.
The license only says that the license "does not apply to any document created using the Font Software", not that the license does not apply *at all* once the font is embedded.
A little clarification, it's not the license that does not apply to documents created with the font, but the requirement that the font can only be distributed under the same license. Here is the precise text about this exception:
5) The Font Software, modified or unmodified, in part or in whole, must be distributed entirely under this license, and must not be distributed under any other license. The requirement for fonts to remain under this license does not apply to any document created using the Font Software.
The problem in this case is that the license allows conversion of the font to any other license or public domain once it is embedded in a document. The license explicitly says that it no longer applies once the font's embedded. And the authors didn't realize that if you extract the font from the document, the license doesn't come back!
I find your interpretation of the license quite strange (but, well, I am not a lawyer). The license only says that the license "does not apply to any document created using the Font Software", not that the license does not apply *at all* once the font is embedded. If you extract a font out of the document, I suppose you obtain a copy of the original font, or at least a modified version of the original font, and the license does explicitly cover copies and modified versions. I would expect this holds for any copy or modified version, no matter by which process they were obtained.
I think that for free font licenses allowing the fonts to be embedded without posing restrictions on the license of the document is of paramount importance. Do you know any other font license that allows this form of embedding and is for sure lawyer-proof?
The person who's taking you to lunch has no intention of paying.