OK - problem solved!!! - Altera DE boards can communicate two ways with a host PC over the USB blaster cable without a NIOS processor!!!
My solution uses the Jtag_atlantic library supplied with the Quartus software on the PC side as a DLL to be pulled into the PC GUI code (C++ in my case). The jtag_atlantic.dll library can communicate with the Altera USB Blaster device driver.
On the FPGA DE board I implement a Jtag_UART component and my own State_machine VHDL component which controls of the Jtag_UART, handles initialization and reset, reads and sends strings of data from/to the read/write FIFO's of the Jtag_UART respectively.
Implementation is very small in terms of FPGA resources and since it is a hardware module it functions concurrently without slowing down the other functionalities in the design. As a result my implementation is based on a polling hardware solution on the FPGA side - since it is a dedicated state machine for this purpose only - the IRQ signal/service is not necessary. Although it is odd that they are not generated when enabled.
One word of caution regarding this approach - since the USB Blaster is being used - it interferes with the Quartus Signal Tap logic analyzer functionality - After all both use the same USB cable at the same time. I found that the STP works fine if I do not send or receive messages during capture time.
:) :) :) :)