They didn't need to extend, because virtually everyone using RSS was using their reader.
In a way you could say they "extended" the readers, by providing a better one than existing ones. Better enough, that "nobody" cared to make a competitor, until it was clear it was going to die.
So yeah, it's close enough to embrace, extend, extinguish to me.
The Microsoft extinction was of every product except theirs. The purpose of EEE was to eliminate the competition and capture all the market, and it's kind of hard to do that when you eliminate yourself.
Not to mention, that we can not really say they extended the readers, because the extensions didn't make them incompatible and so prevented people from moving, like the EEE did.
I'm glad people are losing some misplaced trust in Google, but let's not blindingly apply labels to this.
I didn't say it was a suitable replacement. It's hardly an uncommon notion that they're trying to push people to Google+. Most of the behavioral defenses of killing Reader have to do with the fact that "social" won. (I disagree. Different use-cases)
Except that makes no sense in terms of Embrace, Extend, and Extinguish. The only extending had nothing to do with RSS as a standard, it was keeping archives of feeds around for nearly forever. Everyone loved that feature and the UI, at least more than many of the competing feed readers, so they used it. That's exactly how you want things to compete in a market.
Which brings me to the next point: what market are you even talking about? There were never any profits in the RSS reader market. The only real market was one of interest by users, which Google Reader pretty legitimately competed in and still retained a large number of users (even if by "it's good enough to not bother switching").
There are still a ton of feed readers still around and still free (it's just consuming XML, after all). The ones that people are jumping to are the ones that have worked on their usability and are offering to take money to guarantee the feature that google didn't: storing feed history.
Embrace, unembrace.