[pdftex] PDFTeX questions about fonts (plus .dvi vs. .pdf in PDFTeX)

[EvilborisNet at netscape.net]

While helping a friend edit a book, I have decided to see if I can use
some PDFTeX features.  The book is in plain TeX, not LaTeX, and I know
very little about plain TeX.  After digging around a bit, I managed to
get both font expansion and margin kerning to work reasonably well.
(Is there a package similar to microtype.sty, for plain TeX?)  Now I
have a dilemma.  Here are the two choices:

1. We can run PDFTeX in PDF generation mode.  This is fine, except all
   figures are in .eps.  I can convert them using epstopdf (though I
   have had in the past odd bounding box problems occasionally).  The
   figures are currently inserted using epsf.tex (do not ask!).  Is
   there a plain TeX compatible macro package for figure insertion
   that is reasonably portable between .dvi and .pdf generation modes
   of PDFTeX?  I managed to hobble together a way to insert the figures
   directly using \pdfximage primitive, but that of course dies a
   horrible when in .dvi mode.  Having separate code for the two mode
   does not sound attractive...

2. We can run PDFTeX in DVI generation mode.  I am not entirely sure
   if all the same features are supported (see below), but the problem
   I see here is that neither DVIPS nor any of the previers (e.g. yap)
   know how to generate the stretched-out (or squished) fonts (such as
   cmbx10+12).  At the moment we are using scalable fonts, and in PDF
   mode PDFTeX stretches and shrinks them internally (autoexpand), but
   dvips and yap do not.  Are there any preprocessors or add-ons that
   can do this automagically?

Any and all hints would be appreciated.

Thanks in advance.