Looking Glass is apparently broken on GNOME + Wayland in this exact way.
Ideally there would be a bare minimum server side decoration for Wayland apps (like Looking Glass) that don’t provide any CSD. Hopefully that’s on the horizon if it’s not what’s being discussed here.
There are quite a few niche window managers and desktop environments that it’d be a shame to loose. I’m quite fond of Windowmaker (and curious about Afterstep), Trinity DE, and NSCDE for example, and I’m not aware of Wayland plans for any of them.