How do I limit the user embedding options to nodes created by that same user?

With the patch provided in this post you can use views to create a button list. With views you are able to reach your goal: Copied from the views documentation:

The 'User: Current' filter will show only nodes that the logged in user has authored.

To do so create a view and enter the name of that view prepended by view_ into the BUEditor button ($drupal_element="view_viewname"). E.g. your view has the name "usernodes" than you enter "view_usernodes".

I haven't committed this patch yet since there is an unsolved issue with the new tag option layout (e.g. the option linktext="Your Text" won't work because no quotation marks inside options are supported by Buttons API yet). If you need this feature now, apply the patch to your Linodef installation and don't use tag options with quotation marks for your buttons.
If you're not familiar with patching I can commit the unfinished patch to the dev branch though.

You may now use views to customize the button lists as you like. If you have questions about the usage of those views and the documentation provided within the dev release doesn't help then don't hesitate to ask.

Fixed since this works as intended with views.