PDF is media. Your IE is doing this on local media for security reasons.
That said, it's better if you don't embed PDF into web pages. Not everyone has the necessary plug-ins for their browser/devices. Some people (myself included), prefer to open PDFs in Acrobat Pro instead of our browsers. If you embed your PDFs in a web page, people like me will never see them.
A much safer approach is to insert a small screenshot with a direct link to the PDF file. Your site visitors can decide for themselves how to handle the file. That's how Adobe does it.
Alt-Web Design & Publishing
Web | Graphics | Print | Media Specialists
I am developing a hybrid web-application that needs to work both offline (entire website) and in a hosted environment. A key part of the product is displaying PDF's with a dynamic index outside of the PDF. This allows us to use PDF's collected from hundreds of contractors, clients and manufacturers and combine them into one searchable product with a consistent interface. I can specify product requirements including IE browser settings, installed plug-ins etc. I am not trying to cater to a wide audience such as everyone online, but a specific one that is spending $5k-30k for a custom resource.
I expect the limiation is due to a wide cast net regarding security. I tried every setting in IE and essentially fully disabling all security options did not resolve it.
I found a solution, by accessing the ActiveX object directly you can use the exposed classes described here: http://livedocs.adobe.com/acrobat_sdk/9.1/Acrobat9_1_HTMLHelp/wwhelp/wwhimpl/common/html/w whelp.htm?context=Acrobat9_HTMLHelp&file=IAC_API_OLE_Objects.103.167.html
var pdfO = document.getElementById('pdfObj');
<OBJECT id ="pdfObj" data="test.pdf" TYPE="application/pdf">
<a href="test.pdf">Fall-back code</a>
This actually works much faster as well, since the plugin doesn't need to be re-drawn in the DOM