What if varlink supported both JSON and a subset of cbor with the "cbor data follows" tag at the beginning (so the server can determine if it is json or cbor based on the beginning of the message)?

It would add a little complexity to the server, but then clients can choose if they want to use a human readable format that has more available libraries or a binary format.

As for strace, tooling could probably be added to automatically decode cbor to json, either as part of strace, or in a wrapper.

There could also be a varlink proxy (similar to varlink bridge) that could log or otherwise capture requests in a human readable format.