Jean, I think this capabilty for the Circle tool is one that would be happily received. I think this is a great idea.
I don't see why the existing circle tool couldn't incorporate this functionality (perhaps by holding the Alt key while drawing on an edge).
I bet it is possible to do with a Ruby script right now (see some of the features in the new Joint-Push-Pull script for interactively setting the "Prileged Plane"). TIG's Pipe-along-path.rb already puts adds a circle tangential to the endpoint of a path.