There is a strange way of embeding svg, I've used once. For src attribute should be set a data:uri 64bit coded svg object. Somehow you should specify width and height, also add namespace and meta. Thus you create a separate svg-document and insert it to a page via embed tag. An other solution is to wait till IE, opera, chrome, safari, and firefox would support svg inside text/html file.
You wrote:
But it is not HTML5 and without a DOCTYPE
Not true. From http://dev.w3.org/html5/html-author/
There are two syntaxes that can be used: the traditional HTML syntax, and the XHTML syntax
And
For XHTML, it is recommended that the DOCTYPE be omitted because it is unnecessary
To date there is no support for HTML5 in IE. The same applies to SVG (except by using plugins). It is clear then that IE is not your target browser.
Today I would not pay much attention to validator because HTML5 is a Working Draft.
Answer: Stay with XML serialization, this will give you full support for SVG.