setAs vs setIs

It seems to me your problem here is simply that you did not define a 
coerce cal in setIs, so it does not know how to turn a C object into a 
B object, which is what you ask it to do here. It knows how to test if 
C object is also a B object, because of the test function you 
provided, and it can do the replacement you ask it in as(c,"B") <-b 
because of the replace command you provided, but the third part is 
missing. Perhaps something like this:
setIs("C","B",
    test=function(object){return(object at c>0)},
    replace=function(from,values){
        from at c <- values at b^3
        return(from)
    },
    coerce=function(from) {
        new("B",b=from at c^(1/3))
    }
)