Assuming there are no copyright restrictions on the subject, can I insert a CC BY-SA photo as a figure in another work, for example an academic paper, that is not itself CC BY-SA?

(Somewhere along the line I picked up this idea that CC BY-SA is more like LGPL than GPL when it comes to inclusion in other works. If so, is the difference between inclusion and modification clearcut?)

Assuming you comply with the license as regards attribution and labelling (ie, you indicate the author + the license in an appropriate way, such as an image caption) then you are free to do this.

The CC license distinguishes between "derivative works"(1a), which need to get the CC-BY-SA license, and "collective works" (1c), which don't. Including one CC-BY-SA paper as a chapter in a book is considered a collective work, for example, and including an otherwise unmodified picture as a figure in a paper would seem to fall easily under this definition.

Edit (October 2015): a US district court has recently discussed a similar issue (a CC-BY-SA image being used as the cover of a book) and held that that situation clearly constitutes a "collective work":

Because this 112-page book of maps is not in any way "based upon"” the Photograph, and because defendant did not "recast, transform[], or adapt[]" the Photograph when it used it as the cover art for the Atlas, see License § 1(b), the Court finds that neither the Atlas nor its cover constitutes a derivative work subject to the ShareAlike requirement. Rather, the Atlas is more akin to a collective work, because the Photograph was placed "in its entirety in unmodified form" alongside "other contributions, constituting separate and independent works" – that is, the maps."

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