Hi Andy. I don't have a fix for that particular westell modem/router, but I did overcome similar network traffic problems.
I do not have a Verizon account but I do have DSL with AT&T. A couple of years ago I had similar problems with network traffic on a westell modem and I fixed it by purchasing a cheap router that is compatible with third-party firmware (dd-wrt, tomato, etc.), flashed the device with the firmware, configured the new router for the dsl connection information, then bridged the westell modem, and finally hooked everything up. It has worked much better since. Actually it works, where before I did this, it didn't.
I mention purchasing a cheap router because I saw an asus router for sale online just yesterday for $12 (after a $10 rebate). Asus routers can be had for around $20-$25 without a rebate. I picked up an extra (as in spare) wireless N router a month or so ago for $25, it is just waiting to be flashed and used.
But back to your problem:
...if I totally disable the router's hardware firewall BitTorrent usually works OK. So it seems to me that the culprit is the Westell.
If I enable the firewall, at almost any setting, everything I use, other than BitTorrent, works just fine. So I'd like to have it enabled, but I just can't figure out how to get it to allow BitTorrent to pass.
Just to verify, do you have port forwarding properly configured and also, do you have the setting in transmission to automatically change the port number when starting the program? This might throw it off. I have it set to maintain the same port number.