If international treaty obligations block sovereignty, then the UK isn't sovereign within the UK either (!), since there are certainly international treaties signed by the UK which prevent the UK authorities doing certain things within the UK. For example, the UK authorities cannot usually arrest diplomats, regardless of whether or not the diplomat is in an embassy.
Yup. International treaties are an exchange of sovereignty for something else. The general public imagine that XIX-century-style nation states still exist, but they haven't for a long time. I suspect the USA's rhetoric of patriotism, especially post-9/11 exacerbates this view. Even the USA shares a lot of its sovereignty with external entities (gasp!).
The only XIX-century-style nation state left might be North Korea, FWIW.
So by the dictionary definition of sovereignty -- "supreme power or authority" the sovereign inside the walls of the embassy is Ecuador, not the UK, since the UK has no de facto authority there. But by the definition of "sovereignty" applied to issues of land ownership, the interior space of the building is technically still British and would revert back to enforceable UK legal jurisdiction when the mission is over.
So really you could argue it either way.