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They explained that a few compounds including polyethylene glycol can help glue the nerves together and function (transmit electrical impulses), as they claim, at 10% efficiency. They then state that better compounds exist and that efficiency can also be improved with some other chemicals.

At least so I read it

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Yeah I caught that. I'm wondering more about the alignment problem. You wouldn't, for example, just glue a severed bundle of fiber optics back together without reconnecting each strand individually.

Why not? Brains adapt very well. Monkeys given a brain implanted electrodes that control a mechanical arm learned to use it in days. I am pretty sure that with some therapy you could use all your limbs quite well if i swapped the neurons that go to them haphazardly. And it would probably take months, not years of therapy

http://en.wikipedia.org/wiki/Neuroplasticity

If you connected through a silicon interposer you could use an FPGA or something similar on the silicon to rearrange and possibly even transcode the signals as needed.

Some sort of precise robot similar to a wire-bonding machine could make bonds between nerve ends and pads on the silicon. And then maybe fill the whole area with something solid like epoxy so the bonds don't move or loosen?

In other words, an API?

More like a patch panel.