All is well. Then, the transmit routine should recognize that the UART is off, restart it, and only then start queuing data again. When I'm writing UART drivers, I always start testing the system using the transmitter in a polled mode. I either set the emulator up to send a single character to the UART repeatedly, or write a bit of code to do the same. Very occasionally the stream immediately shows up on the terminal's stream.
Life being what it is, though, usually the screen stays frustratingly blank.
I'll grab a scope probe and start looking at waveforms out of the UART itself. If the line is dead, then there's a good chance the code is just not setting up the UART right, or the UART is not properly connected to the computer's bus. Remember that you can watch every bit of the program's actions on the UART by synching the scope on the device's chip select and examining the data and control busses. Sooner or later the code will be right, and data will start to flow. Use the scope to check the rate - it could be wrong.