I've got my unit set up with hostapd. Even though iwconfig would bluntly refuse to put my rt73 unit into master mode, hostapd seems able to do it.
I'm using the 802.11 drivers option in hostapd. Might be worth a go if you haven't tried already.
Okay - this seems like an obvious question, but here goes: the new Guruplug can be set up to be a wireless access point, right?
I've read that for an access point to work under Linux the wireless chip/drivers have to support master mode. I'm assuming this is the case with the Guruplug, but a Google search for 88w8786 "master mode" comes up empty.
Also, it doesn't have an antenna - does that mean it has a limited range?