I'm getting essentially the same issue in firmware 2.8 on the Mark IV. Pineapple won't finish booting with the hub plugged in, and doesn't really seem to operate correctly with it plugged in after booting. It's not mounting my USB drive (even though it does when plugged in normally) and when I issue iwconfig it shows my wlan1 as having a txpower of 0 dBm. Very weird stuff.
lsusb shows that both the devices are plugged in, but I think this has something to do with the hub not regulating input power. I had the same back feed issue over USB, but instead of cutting the red wire (not very reversible) I unsoldered it. I taped the red lead that was going to the Pineapple and was plugging into a Samsung wall charger (I don't have a battery pack yet) which is 5v 1A. When I did this, the Pineapple didn't detect my Alfa, so I tried plugging the hub (still plugged into the wall adapter) into my Windows box and it blue screened almost instantly. When I plugged both cables from the hub into USB 2.0 ports on my Windows box, the hub worked as expected, I could use the Alfa and see the USB disk. Same thing for my USB 3.0 ports. I now have it powered via my Windows box (red cable) on a USB 2.0 port and plugged into my Pineapple. As I said before, USB isn't mounting, Alfa shows up but with 0 txpower. I'm starting to wish I would have read up on this thing before buying it. Does anyone have this thing working?