You can embed the image and then save (if your images are not very heavy).
To stop the creation of clipping masks around images in eps files and still keep your Linked File "linked" and not "embedded", uncheck "Include Linked Files" checkbox in the EPS Options dialog and then choose Preserve Links in the subsequent warning dialog.
That would, then, require including the image file along with the eps file, when it's sent to the end client? Unfortunately, that's not part of the workflow for a particualr client. They require eps files with images inluded in the file.
Oh well, no biggie.
But, why does CS5 create the second extra Group level?