The best solution is always the simplest. In this case, a kern to tighten it up just enough:
I wouldn't use any skip such as \! here, as that strikes me as a botch. Similarly, pt is the right unit to be using here.
The extra space is due to TeX enclosing C^* in a box without any information as to its visual shape. That's just how TeX rolls, no matter whether it is setting mathematics or text.
As regards macros, I'd probably write \Cstar-algebras or \Cstar algebras:
I would never write "algebras" into a macro, instead writing that after a macro for the rest.
These solutions are adapted from the TeXbook.