The TUSB3210 has a master reset INPUT pin w/weak pullup to keep it from floating. Are you actually resetting the chip at power-up? The data sheet has a sketch of a cap to ground and a resistor to VCC on the reset pin -- watch that pin with a 'scope and see what it's doing. Maybe the reset input never goes high enough to take the thing out of reset? Section 4.2 of the data sheet (titled, appropriately enough, "Reset Timing") has a discussion about the reset requirements -- make sure you're doing the right thing.

There's a "Function Reset Enable" register bit that controls whether or not a USB reset will reset the micro -- try disabling that feature.

Make sure you've really disabled the watchdog -- your failure description sounds like a watchdog reset.

Make sure you've got the bus/self power mode pin set properly.

--a