Ebooks are xhtml so styles are limited to the capabilities of css. I

fear that initials has to be left flowing images.

Sorry, but if I understand what you mean by initials, that is not the case. Consider

.lettrine>p::first-letter {
    font-size    : 3rem ;
    line-height  : 0 ;
}

This produces a raised large character at the beginning of a paragraph. It does not automatically accommodate leading quotation marks and such, so some tuning may be needed, and of course you have to tag the paragraph with the appropriate class.

Similarly, you can set the first line of a paragraph to smallcap.

-- 
Rik