I am aware of other solutions like System.Data.Sqlite or Firebird through Dblinq, but since nothing beats SQL Compact Edition (integration-wise) with Visual Studio, I would like to use it and to know if its license allows its usage in Open Source projects.
Thanks.
As long as you don't need replication with a big MS SQL Server you are fine with SQL CE.
IANAL, and I do not know if the EULA is compatible with every open source license.
But, as long as you sign up for redistribution rights you should be fine to redistribute it with an open source project.
One point to bear in mind is that you would presumably not be distributing the source code for the Compact Edition. This might make your project fail some definitions of "Open source" if the Compact Edition is closely integrated with the rest of your code. This in turn might make it inelligible to be hosted on certain FOSS web servers (I'm thinking of Google Code) and might result in your prtoject getting a bad name amond more zealous FOSS supporters.