This happened to me as well and closing and re-opening TeraTerm cleared up the issue. I didn't have to reset the MicroZed.
I suspect that TeraTerm can either get out of sync or automatically change the character encoding on the fly. I suspect this because I had started the session communicating fine. I then cat'd a binary file which immediately caused the issue you are seeing. Once in that state I couldn't get out of it until I closed TeraTerm.