Tim Heyer has a good blog post about this. http://timheuer.com/blog/archive/2010/01/30/reading-mp3-id3-tags-with-silverlight-taglib.aspx
Like you, it also ran into TabLib # only using local paths.
One thing the TagLib # tag did not possess was the implementation of the stream. Most libraries, in fact, assumed a local file path. Fortunately, the library was written using the common File interface, so I just had to create my own StreamFileAbstraction. I decided to do this in my project, and not in the base library. This was easy, as LocalFileAbstraction actually migrated Open to a file as a first task and set some public variables. My abstraction basically just passes the stream already and is ready to go.
There is an example on the short story site that uses file abstraction. http://developer.novell.com/wiki/index.php/TagLib_Sharp:_Examples
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