Inspired by jfburdet, I wanted to see if it was possible to directly intercept an ASP.NET web service call at stream/byte level rather than reconstructing XML. And it is! See code below:

using System;
using System.Collections.Generic;
using System.IO;
using System.Linq;
using System.Text;
using System.Web.Services.Protocols;
using System.Xml;

using Test.MyWebReference;

namespace Test {
    /// <summary>
    /// Adds the ability to retrieve the SOAP request/response.
    /// </summary>
    public class ServiceSpy : OriginalService {
        private StreamSpy writerStreamSpy;
        private XmlTextWriter xmlWriter;

        private StreamSpy readerStreamSpy;
        private XmlTextReader xmlReader;

        public MemoryStream WriterStream {
            get { return writerStreamSpy == null ? null : writerStreamSpy.ClonedStream; }
        }

        public XmlTextWriter XmlWriter {
            get { return xmlWriter; }
        }

        public MemoryStream ReaderStream {
            get { return readerStreamSpy == null ? null : readerStreamSpy.ClonedStream; }
        }

        public XmlTextReader XmlReader {
            get { return xmlReader; }
        }

        protected override void Dispose(bool disposing) {
            base.Dispose(disposing);
            DisposeWriterStreamSpy();
            DisposeReaderStreamSpy();
        }

        protected override XmlWriter GetWriterForMessage(SoapClientMessage message, int bufferSize) {
            // Dispose previous writer stream spy.
            DisposeWriterStreamSpy();

            writerStreamSpy = new StreamSpy(message.Stream);
            // XML should always support UTF8.
            xmlWriter = new XmlTextWriter(writerStreamSpy, Encoding.UTF8);

            return xmlWriter;
        }

        protected override XmlReader GetReaderForMessage(SoapClientMessage message, int bufferSize) {
            // Dispose previous reader stream spy.
            DisposeReaderStreamSpy();

            readerStreamSpy = new StreamSpy(message.Stream);
            xmlReader = new XmlTextReader(readerStreamSpy);

            return xmlReader;
        }

        private void DisposeWriterStreamSpy() {
            if (writerStreamSpy != null) {
                writerStreamSpy.Dispose();
                writerStreamSpy.ClonedStream.Dispose();
                writerStreamSpy = null;
            }
        }

        private void DisposeReaderStreamSpy() {
            if (readerStreamSpy != null) {
                readerStreamSpy.Dispose();
                readerStreamSpy.ClonedStream.Dispose();
                readerStreamSpy = null;
            }
        }

        /// <summary>
        /// Wrapper class to clone read/write bytes.
        /// </summary>
        public class StreamSpy : Stream {
            private Stream wrappedStream;
            private long startPosition;
            private MemoryStream clonedStream = new MemoryStream();

            public StreamSpy(Stream wrappedStream) {
                this.wrappedStream = wrappedStream;
                startPosition = wrappedStream.Position;
            }

            public MemoryStream ClonedStream {
                get { return clonedStream; }
            }

            public override bool CanRead {
                get { return wrappedStream.CanRead; }
            }

            public override bool CanSeek {
                get { return wrappedStream.CanSeek; }
            }

            public override bool CanWrite {
                get { return wrappedStream.CanWrite; }
            }

            public override void Flush() {
                wrappedStream.Flush();
            }

            public override long Length {
                get { return wrappedStream.Length; }
            }

            public override long Position {
                get { return wrappedStream.Position; }
                set { wrappedStream.Position = value; }
            }

            public override int Read(byte[] buffer, int offset, int count) {
                long relativeOffset = wrappedStream.Position - startPosition;
                int result = wrappedStream.Read(buffer, offset, count);
                if (clonedStream.Position != relativeOffset) {
                    clonedStream.Position = relativeOffset;
                }
                clonedStream.Write(buffer, offset, result);
                return result;
            }

            public override long Seek(long offset, SeekOrigin origin) {
                return wrappedStream.Seek(offset, origin);
            }

            public override void SetLength(long value) {
                wrappedStream.SetLength(value);
            }

            public override void Write(byte[] buffer, int offset, int count) {
                long relativeOffset = wrappedStream.Position - startPosition;
                wrappedStream.Write(buffer, offset, count);
                if (clonedStream.Position != relativeOffset) {
                    clonedStream.Position = relativeOffset;
                }
                clonedStream.Write(buffer, offset, count);
            }

            public override void Close() {
                wrappedStream.Close();
                base.Close();
            }

            protected override void Dispose(bool disposing) {
                if (wrappedStream != null) {
                    wrappedStream.Dispose();
                    wrappedStream = null;
                }
                base.Dispose(disposing);
            }
        }
    }
}