First of all, I think it's wise for you to upgrade to SQLServer CE 3.5, as that version is IMHO much better.
Now, about the problem you ran into. The type conversion list you refer to is for supporting the types at all, as CE doesn't have a 'varchar' type for example
In your case, that's not necessary, CE supports ntext and image. If we'd change the type, it would give a problem for people who have a CE db with ntext fields.
So rule of thumb: types of fields have to be the same if you want to share code between a sqlserver server version and ce version. As CE doesn't support some types, like varchar, the dqe makes conversions for them so the equivalent type, i.e. nvarchar for varchar, should be used as type in the CE table.
That these types are 'deprecated' is a bit too much I think, they're still supported in 2008 for example.
I'll see if it's possible to have a varchar(max) field on the server and use the same code on a CE db, because if not, the list you quoted is incomplete.
(edit) CE 3.1 at least doesn't have nvarchar(max) nor varbinary(max), so equivalents have to be used, which indeed should be ntext and image in CE. I'll see if I can update the DQE for this.