The testcase and reference should appear identically because they have the same DOM. They don't, apparently because removing the src attribute from an <embed> doesn't make the replacement box go away. Note that I'm talking about the inline replacement box (which appears even in reftest), not the information bar (which only appears in Firefox).
With bug 119078 being wontfix the proper fix for this is probably something janky like having an "empty" binding, or canceling the forced minimum-width/height on existing bindings when ObjectLoadingContent transitions between binding->no
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