Cannot embed a paginated report unless it is created in Power BI Report Builder (vs online)

I have been chasing my tail all day on this, only to find it is down to how the report is created. 

We are in the process of migrating to Power BI embedded for our reporting. One test we're conducting is embedding paginated reports in our web app. 

We have found a difference between embedding a report created via Power BI Online, using an existing dataset and creating a report from the desktop report builder. 

For simplicity, we've replicated the issue using the developer samples. 

https://github.com/microsoft/PowerBI-Developer-Samples

If I create the report on the desktop app, I can embed the report. If I create it online, it's not recognised correctly as a paginated report and, therefore, fails to load. 

The issue occurs at IReportOperations.GenerateTokenInGroup

(GetEmbedTokenForRDLReport, Embed service.cs)

"InvalidRequest:Embedding a Paginated report with Power BI Dataset as a datasource is not supported with V1 embed token"

I understand the message, but I don't understand why the difference in response is based on how the paginated report was created. The only change between a working report and a non-working one is the report ID. 

Both reports work in the Power BI online app. 

Is there a fundamental difference between a report created online vs via the desktop app?