Got it working without the GPIO expander,
I used GPIO19 for the status pin, which really needs a 'regular' GPIO, not an I2C pin.
Then I used a gpio= statement in config.txt to set GPIO3 (which is an I2C pin) to low on bootup. GPIO3's then used as the shutdown pin for the PowerBlock.
This arrangement works fine.
@petrockblog -- perhaps the documentation could be updated to make clear that GPIOs with hardwired pullup resistors (such as the I2C pins) cannot be used as the status pin?