I am working with K-line that is similar to yours. My code starts the bit-bang before activating the UART1.
I am using UART0 for debug. This is on a 1284 chip.
digitalWrite (TX, HIGH); // makes K-line high 3
digitalWrite(ledPin,HIGH);
delay(2000); // wait for K-line to be clear 3
digitalWrite (TX, LOW); // makes K-line low 3
delay(25);
digitalWrite (TX, HIGH); // makes K-line high 3
delay(25); //last delay before first message
Serial1.begin(10400);
Also, I think there is a function called Serial.end() to stop serial comms.. I am not positive about it though.