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disq
Managed to reproduce the bug whilst an Apple "Capture Data.app" was running.
Can describe it perfectly too, and also prove the workaround exists.
Just uploading the data to Apple... they should be able to figure this out.
Hypothesis: USB 2.0 devices connected to USB-C hubs that provide a transparent proxy capability and present the USB 2.0 devices to the Mac as USB 2.0, are subject to a polling / refresh error within Catalina whereby all USB 2.0 devices connected via any USB-C hub at that time will become unresponsive though remain visible in About this Mac > System Report. However, if the USB2.0 devices are connected to USB-C hubs that provide terminating proxy capabilities and that then present those USB 2.0 devices as USB 3.0 devices to the Mac... then the problem will not occur.
The workaround is therefore to use a USB-C hub that terminates USB 2.0 connections and presents them as USB 3.0 connections.
The root cause may be how Catalina refreshes and polls USB 2.0 devices via the system bus. It is interesting that USB 2.0 devices connected to any hub all freeze, which is why this is a problem with the Mac and not the hubs. That it doesn't happen instantly suggests it isn't hardware but the software (the operating system).
I have a workaround (Caldigit TS3+ hub)... @disq has a workaround (the hub in his monitor)... but the issue plainly exists in Catalina, and perhaps it's Catalina + recent Mac hardware.
Edit: Follow-up from 2020-05-22, Apple think I am the first person to have reported this and have not found anything in the logs provided. They have said that they'll keep looking, but frankly it feels like they're suggesting the problem is between keyboard and chair. I'm going to give them the full text of the issue via email so it can be in their helpdesk software and if people report a similar thing it may be found. However... I now know how to work around this... so meh, I am happy but I feel for others who aren't going to figure it out.