The g_spawn_async_with_pipes() + g_shell_parse_argv() sounds about right. I'm not sure what you mean with the glib event loop? It's used there normally and you probably don't need to explicitly do anything with it.
You probably need to use g_child_watch_add() to track when the child is done (exited) and continue the parent's work then.
Also the part about reading the child's stdout and updating the progress sounds right. It's been awhile since I touched this (or glib even) so I might be forgetting something here