I posted this message as a reply to a question, but want to make sure this gets out there for others who may benefit:
After about four hours of debugging this issue, I have found that, at least for me, the regression issue seems to be with Adobe Reader handling a gzipped PDF embedded in the IE browser, specifically. I can't speak to why this would occur, but hopefully this will help others out. On our site, we had gzipping only disabled (as most probably do) for images (gif, jpg, jpeg, png), meaning PDFs were being gzipped. This, prior to 10.1.2, worked just fine. I changed our web server configs so that PDFs are no longer gzipped and I can now view the PDFs in IE with Reader 10.1.2 the same as before.
If you're using Apache, look for a line that looks something like this in your httpd.conf:
\.(?:gif|jpe?g|png)$ no-gzip dont-vary
And change to:
\.(?:gif|jpe?g|png|pdf)$ no-gzip dont-vary
That all being said, this still sounds like a bug in Reader 10.1.2, and gzipped PDFs via IE should be supported. I'm sending a separate report to Adobe so hopefully that specific information will help them debug / fix. Until a patch has been released, however, this will make sure our customers can view PDFs. Hope this helps someone else out!