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I finally found some resources and a solution. I will share it here.

ThinkingStiff
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Dabblernl
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    When asking a question that you're going to answer yourself, make the question sound like an actually question. Not, "I know how to do this". It's more search worthy that way. – ThinkingStiff Jun 30 '12 at 01:54

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It is documented here that this indeed is a feature and not a bug.

In this excellent series of blogs you can find anything you always wanted to know, but never dared to ask about SQLServerCompact 4.0

The author of these blogs has made a wonderful Add-In for Visual Studio 2010 that adds Entity Data Model wizard functionality to create a model from a SQLServerCompact 4.0 database for any type of project.

Dabblernl
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