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The recently proposed Householder transformed density-matrix functional embedding theory (Ht-DMFET) [Sekaran et al., Phys. Rev. B 104, 035121 (2021)], which is equivalent to (but formally simpler than) density matrix embedding theory (DMET) in the non-interacting case, is revisited from the perspective of density-functional theory (DFT). An in-principle-exact density-functional version of Ht-DMFET is derived for the one-dimensional Hubbard lattice with a single embedded impurity. On the basis of well-identified density-functional approximations, a local potential functional embedding theory (LPFET) is formulated and implemented. Even though LPFET performs better than Ht-DMFET in the low-density regime, in particular when electron correlation is strong, both methods are unable to describe the density-driven Mott-Hubbard transition, as expected. These results combined with our formally exact density-functional embedding theory reveal that a single statically embedded impurity can in principle describe the gap opening, provided that the complementary correlation potential (that describes the interaction of the embedding cluster with its environment, which is simply neglected in both Ht-DMFET and LPFET) exhibits a derivative discontinuity (DD) at half filling. The extension of LPFET to multiple impurities (which would enable to circumvent the modeling of DDs) and its generalization to quantum chemical Hamiltonians are left for future work.