Using XMPP won't work, because the Channel API only talks XMPP between Google servers: the XMPP traffic isn't exposed to the browser (you can verify this by using FireBug or the Chrome Developer Window to look at the contents of the "bind" requests; you'll see there's JSON being sent down).
As you said, the only viable current solution would be to wrap a browser control running just enough javascript to connect to the channel in your app, and use it to signal your C# app when it gets messages. Clunky, but workable.
While you could also reverse-engineer and then simulate what the iframe is doing and directly consume the JSON messages, your app could be broken in myriad ways as implementation details change -- and they will.
All this said, I am curious about how many people would like a native C# library, and what sorts of apps you want to write with it. WP7 apps? Windows client apps? Server apps? I've created a feature request for App Engine here:
http://code.google.com/p/googleappengine/issues/detail?id=4206
Please upvote it if you're interested, and the more details/compelling use cases you can name, the better.
Thanks!