I need to build a scripting interface for my C# program that does system level testing of embedded firmware.
My application contains libraries to fully interact with
I've heard very good things about IronPython for exactly this type of scenario. I'd certainly risk spending a few hours on a quick proof-of-concept, to see how it pans out.
Michael Foord will happily wax lyrical about the success of IronPython in similar cases (most specifically for him, for spreadsheet savvy users), and his book covers (IIRC) a few pointers about hosting it from .NET.