You can however there are a couple issues. First is that the placement target is a UIElement as you said. You'd probably have to target the WindowsFormsHost there instead.
Second, Microsoft's interop blocks mouse input from bubbing up to WPF when the mouse is over a WinForms control. So we can't determine when to fade in/out the mini-toolbar. I have seen a customer implementation though where the customer used a timer that showed while the mini-toolbar was open and called a special method we made available to them on the timer's tick event:
That method takes a screen mouse location. This way the mini-toolbar still fades in/out based on the NotifyMouseMove notifications you send.