Working with Blend 3 for a Silverlight 3 project I needed to use a special font that I purchased for the project.  I received a warning after choosing the font.  (The font was installed in my fonts directory.)

The warning was:

The font, <font name>, isn’t a built-in Silverlight font.  You must embed this font for it to display in your Silverlight application.

So I poked around in the UI and found the Font Manager tool under Tools | Font Manager

In the Font Manager tool check off the fonts you want to embed.

This takes the .TTF font, adds it to the project under /Fonts.  Additionally when your project is compiled the font is embedded in a Fonts.zip file.  Your XAML will be updated to read FontFamily="Fonts/Fonts.zip#Kalinga".

Very cool!