Didn't come across this last time I was playing with E17: exalt network manager.
sudo apt-get install exalt exalt-daemon emodule-exalt libexalt-dbus-dev libexalt-dev
This solves the "have to run knetworkmanager in an alternate WM' problem, as
exalt runs as a standalone app (and has an E17 widget).
Caveats: Hold the shift key (not Caps Lock!) down when entering your WEP key, and be sure to changed the mode from Ad-Hoc to Managed.
For those who are suffering with unmaintained E17 packages, use the Gos servers:
deb http://packages.thinkgos.com/gos/ reloaded main
deb-src http://packages.thinkgos.com/gos/ reloaded main