The eventual solution to this SIX year old problem was to pull JTAG_EN high with a resistor, and have the JTAG pod pull it down when plugged on.
It looks like the PSTEN bit in the MCF5235 CCR simply doesn't work, AND the Manual (latest Rev 2, 7/7/2006) has never been corrected to say this AND there's never been a new version of the Reference Manual Addendum (latest Rev 2.2, 5/23/2007) to correct this either.
This post from 2009:
Disable PST/DDATA signals on MCF5274
says "You can't disable the PST signals on this part using that register" and "Will update errata manual.".
Four years and waiting for that update.
I'm guessing that because a Freescaler said "it doesn't work in the MCF5274" then maybe it is also broken in a different but related part.
Tom