Timer Match pin undefined level and Timer IRQ fails to clear

Ok, so I am trying to toggle the Match pin 1 for the MCB2140 with the Timer0. Basically, like a PWM except it is either on or off for the cycle time, never in between.

Unfortunately, the pin seems to be at an undefined voltage level of .5 V except when I am using the JTAG debugger and it stays at 3.3 V all the time, even though it is suppose to initialize to logic 0.

Could anyone offer insight?

#include <LPC21xx.H>
#include <stdio.h>

#define ARRAY_SIZE 5
//#define CYCLE_LENGTH 0xFFFFFFFF
#define CYCLE_LENGTH 0x00000FFF

unsigned char BUFF0[]={'U', 'Y', 'Z', 'A', 'B'};
int bit_count=0;
int byte_count=0;
void T0isr(void)        __irq;

void init_timer1(void)
{
        PINSEL0 |= 0x00000800;  //Match1 as output
        T0TCR = 0; //TIMER1 set as timer to PCLK
        T0PR  = 4; //Set Prescale Register (divider) to 4
        T0TCR = 2;      //Reset counter and prescaler
        T0MCR = 3;      //On match reset the counter and generate an interrupt
        T0MR0 = CYCLE_LENGTH;                   //Set the cycle time
        T0MR1 = 0;                      // Set duty cycle to zero
        T0EMR = 0x042;                  //On match clear MAT1
        T0TCR = 1; //TIMER1 ENABLE
}

void init_bus(void)
{
        //PINSEL0 |= ~0x0000003; //assures that P0.0 is set to GPIO Port 0.0
}

void init_VIC(void)
{
        VICVectAddr4 = (unsigned)T0isr;         //Set the timer ISR vector address
        VICVectCntl4 = 0x00000024;                      //Set channel
        VICIntEnable |= 0x00000010;                     //Enable the TIMER0 interrupt
}

void init_LED(void)
{
        IO1DIR = 0x00FF0000;
        IO1PIN = 0x00550000;
}

int main(void)
{
        init_LED();
        init_timer1();
        init_bus();
        init_VIC();

        while(1);
        {
        //...
        }
}

void T0isr (void)       __irq
{
T0EMR           |= 0x00000002;                                          //Set MAT1 high for begining of the cycle
//debug
//////////////////////////////////
IO1PIN = ((IO1PIN+1)& 0x00FF0000);
//////////////////////////////////
if(bit_count < 8)
{
        if(BUFF0[byte_count] & 0x01)                                //set match 1 to cycle time (setting biit high if
        {
                T0MR1 = CYCLE_LENGTH;                                   //bit is supposed to be a '1'
        }
        else
        {
                T0MR1 = 0;                                                              //else set match 1 to 0 to force output to a zero.
        }
        bit_count++;
        BUFF0[byte_count] = BUFF0[byte_count] >> 1; //shift byte over by one bit for next transfer
}
else if((bit_count == 8) && (byte_count < ARRAY_SIZE))        //a new byte!
{
        bit_count=0;                                                            //reset bit count for new byte
        byte_count++;                                                           //establish new byte number of buffer
        if(BUFF0[byte_count] & 0x01)                                //set match 1 to cycle time (setting biit high if bit is supposed to be a '1'
        {
                T0MR1 = CYCLE_LENGTH;
        }
        else
        {
                T0MR1 = 0;                                                              //else set match 1 to 0 to force output to a zero.
        }
        bit_count++;
        BUFF0[byte_count] = BUFF0[byte_count] >> 1;       //shift byte over by one bit for next transfer
}

else //ERROR or DONE
{
        //unhandled
}


T0IR            = 1;                    //Clear match 0 interrupt
VICVectAddr = 0x00000000;                       //Dummy write to signal end of interrupt
}