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In the README file for TVI it states in #4 of the "nitty-gritty" section that block displays can be used and is, in fact, recommended:
Alternatively, you may remove the page displays and simply use the default or block view for TVI views: this is recommended.
But as far as I can tell, block displays don't actually work. I took a look at the module code and noticed that the output from view::execute_display is being used. In the case of blocks this output is a block array which isn't a valid render array for page callbacks. This results in an empty page when using a block display as the term page. Patch to follow...