It should at least have outputed the last 10 lines (by default) and then hung.

It did! But there is a (usually) 4k buffer on the pipe. If those 10 lines didn't fill that buffer, then your read would never complete. You can prove this by tailing a file with long lines, or just add -100 to the command line.

I am trying not to hate windows, but I know on Unix, I would have been able to trace the process (truss or strace) to find out why or at least where it is hanging.

So, get a copy of NtTrace.exe, though it does take a certain familiarity with the OS to interpret the output--just as it does with STrace.