I'd like to give a bit of model-theoretic context for your question, which is in a certain sense a special case of a more general phenomenon in model theory. This is not an answer to your question, but it's slightly too long for a comment, so I hope you'll excuse me for writing it here. Let $T$ be any first-order theory, and suppose that $\kappa$ is a cardinal such that $\kappa>|T|$ and $\kappa=\kappa^{<\kappa}$. Then $T$ has a saturated model $M$ of size $\kappa$. (Let me know if you would like a reference to this fact; the idea is to build an elementary chain of length $\kappa$, each link of which realizes types over the earlier links.) Now, for a cardinal $\lambda$ and a structure $M$, we say that $M$ is "$\lambda$-universal" if every elementarily equivalent structure $N\equiv M$ of size $<\lambda$ admits an elementary embedding into $M$. One can show that a saturated model $M$ is $|M|^+$-universal; again let me know if you would like a reference to this fact.
So, putting these two facts together, we get the following fact for any cardinal $\kappa$ with $\kappa=\kappa^{<\kappa}$:
If $T$ is a complete first-order theory with $|T|<\kappa$, then there exists a model $M\models T$ of cardinality $\kappa$ such that any model of $T$ of cardinality $\leqslant\kappa$ is isomorphic to an elementary substructure of $M$.
Taking the case where $T=\text{DLO}$ is the theory of dense linear orders gives your desired result almost immediately; indeed, we then get a dense linear order $M$ of size $\kappa$ such that every dense linear order of size $\leqslant\kappa$ embeds elementarily into $M$. If $(O,<)$ is now any linear order of size $\leqslant\kappa$, then $O\times\mathbb{Q}$ with lexicographic ordering is a dense linear order of size $\leqslant\kappa$, and hence there exists an elementary embedding $O\times\mathbb{Q}\to M$. Taking the composition of this with the embedding $O\to O\times\mathbb{Q}$ given by $a\mapsto (a,0)$ now gives an order-embedding of $O$ into $M$. Thus any linear order of size $\leqslant\kappa$ has an order-embeding into $M$, and so in particular every ordinal of size $\leqslant\kappa$ does too.
Of course, this is a very "non-constructive" proof, and it does not give you any tractable representation of $M$ to work with; for some theories $T$, it will generally not be possible to give an explicit construction of the model $M$. $\text{DLO}$ is thus a nicer theory in this regard, and the proof you are giving in your post is a much nicer and more concrete solution for that case. But I thought it might be worthwhile to point out that, provided such a cardinal $\kappa$ exists, then every first-order theory (of size $<\kappa$) will have a model of size $\kappa$ with analogous properties.