Answer
The IPMF::PMFSettings property, used when publishing a map document to a PMF using ArcObjects has two Application settings.
The documentation in the ArcObjects Developer Help for the Application strings are incorrect.
The correct Application strings for IPMF::PMFSettings are:
"OpenOnlyInArcReader"
"InternalObjectAccess"
To publish a map document to a PMF that is readable by ArcMap, set the application strings as follows:
"OpenOnlyInArcReader", False
"InternalObjectAccess", True
Note:
It is necessary to set both Application strings to be able to open the resulting PMF file in ArcMap. If both are true, OpenOnlyInArcReader takes precedence, and the resulting PMF will not be readable by ArcMap.