I've found myself repeatedly answering emails on this subject so I thought it would be a good idea to officially publish my reccomendation.
As much as I appreciate the work Acresso did on Managed CA's, DTF is clearly the better direction to go.
1) DTF solves the problem of tatooing the msi process with a fixed version of the CLR.
2) MakeSfxCa is more flexible and intuitive when dependencies.
3) The MSI interop object model is simply better from a C# coders perspective.
4) The hosting process has an easy debugging story.
5) Being open source it's easier to see problems and get resolutions to issues even if that means doing it yourself.
6) There is no vendor lockin. You can build and consume custom actions in a variety of ways including integration with InstallShield. (That's the way I roll.)