Although this is probably the most challenging and satisfying way of propagating Cephalotus, it is also the slowest. Collect seed as detailed in the Flower section
Seed should be fresh or have been collected then refrigerated for no more than 3 months. Fill a 6inch pot, or shallow tray, with either a 40:40:20 mix of peat, perlite and sharp sand or milled dried spagnum moss. Soak thoughly with rainwater or distilled water. At this point I usually add a Trichoderma solution, but this is not compulsary - just my preference. Place the seeds individually onto the surface of the compost and gently press them into closer contact.
Put the pot/tray in a polythene bag or just cover the top with cling film or sheet of glass. Now they need a period of stratification, which in the UK I usually acheive by keeping them in an unheated greenhouse over the winter, in warmer countries - keep them in the fridge (NOT freezer) for about 3 months. Some growers don't bother with stratification at all and still get good germination. Wherever you keep them do not allow them to go below 37 degrees Fahrenheit / 3 degrees Celsius. They should require no further watering under these conditions, but, if the compost starts to look dry, soak the compost from below by standing it in water - do not water from above.
After the 3 months have passed move the seeds into a lighter, warmer situation - 68 degrees Fahrenheit / 20 degrees Celsius. The seeds will start to germinate over several weeks or months and will first produce a single tap root and several small leaves/pitchers. Some seeds can take up to a year to germinate, so, don't throw the compost out too soon. When these seedlings are large enough to handle pot them on individually into 3inch pots containing your usual compost.
To obtain a mature plant from this method will take several years - prepare for a long wait.