The fix for me is: when I come across an embedded mp3 that won't play, I manually drag the timeline slider from the beginning to the end of the file, then press the "play" button. This seems to work for me every time. Not as elegant as just clicking a link and automatically playing a file - but it's an easy workaround until whatever's going on gets fixed. Somehow, dragging to the end resets the file in some way.
It does seem, that for these improperly working embedded files, shutting down Safari, repairing permissions (always Java files getting repaired), then re-opening Safari - will allow it to work normally only ONCE. Then it's all broken again unless I use the workaround mentioned above - or quit Safari and repair permissions again (not very useful since it only allows the embedded file to work normally the 1st and only time until permissions repaired again).
I might add that I don't have problems with all embedded mp3's. Stream from Amazon works normally, for instance.
Here is an example file that was not working for me (from an earlier post in this thread), that will play when I apply the workaround mentioned above.
http://channel1.soundfolder.com/system/tracks/279/original/LOOP003.mp3