Hi @caracadrian,
I'm not sure why the workspace is stalling. However, I was able to successfully run the translation by changing the order of the transformers (Generalizer before the LineCombiner). I have attached a template with the workaround for you: contours-on-pntcloud.fmwt
It seems the original translation stalls when features are being sent from the LineCombiner to the Generalizer (as shown in the screenshot). I have submitted a PR for this issue: PR #84420.

If you would like to be notified of any updates you can also submit a problem report (please quote your Q&A; URL).
Another option is to use a 2DForcer before the LineCombiner (using the order of your original translation).

Hope this helps.
- Chris
Thanks @ChrisAtSafe, changing the order of the transformers (Generalizer before the LineCombiner) doesn't give the desired result, the 2DForcer workaround does.
I found another workaround: set the Conflict Resolution in the ContourGenerator transformer to Perturb Input Points On Contour Interval. I don't understand why this fixes the LineGenerator to Generalizer stall. I will submit a PR tomorrow so I can attach logs and workspace to it.