We can't know for sure what happened. We can only give you our best guess. Mine is that the boat was overpowered by the wind and too much sail area while trying to beat to windward, and she was laboring. Here's your description of what happened: "...the boat heeled over further than I think she ever has. Close to a knock down with rail buried DEEP in the water. The boat appeared to stall or slow considerably and the rudder felt like it locked up. I could not steer much at all." In my opinion, excessive heeling caused an increase in drag, and that, along with the wave chop, gradually reduced her speed. As she gradually lost speed, she gradually lost lift over the surfaces of the keel and rudder, and at some point, her aerodynamic and hydrodynamic surfaces (the keel, rudder and sails) stalled. As she lost speed, you had to turn the wheel or tiller even more to keep her head to windward, and the effect of applying hard rudder was like applying the brakes, slowing her even more.
I would endorse this as the most likely explanation.
I also note that your first action to shorten sail was to furl the jib. In boats with rolling furlers I know this is the most tempting option when having to shorten sail, but it's not always the best. In my experience, on a lot of broad-beamed cruising yachts the headsail is extremely vital to pointing ability under heavy conditions.
I think that by doing so you exacerbated already heavy weather helm and is perhaps part of the reason why you experienced such a delayed recovery.
In such conditions, by all means take in some headsail - but leave yourself something to work with, and don't be afraid to reef the main if you're overpowered. On big ponderous boats, generally the improved control gained by leaving some headsail out is well worth the extra canvas.