...The I2C state machine in this part has a locking condition, which is stated in the datasheet and errata for this part, but without and debugger and a scope it can be hard to determine if this is the issue. I did verified that this is in fact a real issue with the latest firmware...
Mmm! thanks, yogotie, for figuring that out and reporting it, along with your change to fix it. To bad we don't have a process by which to submit patches (or even a reliable way to get the current and historic firmware source).