The argument against the critics saying WebAssembly would make the web less open was, that you could always disassemble WebAssembly and that said disassembly would be much more readable than for example x86 assembly.

So - since a quick research did not turn up anything - is there a WASM to C "transpiler" that generates readable C?

I'm not aware of one, though it would probably be trivial to write. https://github.com/WebAssembly/binaryen has the helping code for things like parsing. Both https://github.com/kanaka/wac and https://github.com/WebAssembly/wasm-jit-prototype interpret WASM. The latter even JITs into LLVM IR.