I think this is a great library and I would love to see it work with Windows Azure. Windows Azure doesn't have a service management API today (we only have storage APIs) but we are working on one and we'll have it by the end of the year[1].
I do think it'll need some changes to work with us (or with AppEngine for that matter) since libcloud seems to deal with raw nodes and Windows Azure likes to deal with 'services' as the first class entity with the raw nodes/machines/VMs/whatever just being various instances of something we call 'roles'. I think you could kind of hack around that in your code but it wouldn't be very elegant.
[1] I'm the person responsible for them so feel free to reach out to me. I can't reveal much of how it will look like in public yet though.