Currently there is no support (from what I've seen) for attaching watir to an embedded IE window. Several users have had a need for this and I've done some research on the issue but have not yet been able to get a working solution.
What would be nice is to add a new method to watir called something like attach_embedded(how, what)
where how could be :title or :hwnd
and what being the corresponding value
autoit has a function for attaching to an embedded browser and I've tested that it works. Thus, In autoit IE.au3 they have a function which when given a hwnd will return the IE control which if we could do the same thing with watir, we could bind that and control it like a regular browser.