There is a related thread on the pause issue: OS X keyboard troubles and solutions. It may help to reference it for information. Have you verified the issue with a recent SVN build of dosbox?

Is it possible to unpause it by another means: http://www.wikihow.com/Un-Pause-an-Applicatio … -%28Mac-Os-X%29.

The process isn't actually stopped at the OS layer (it continues to render etc.), so SIGCONT doesn't help here (though I tried it anyway).

Tested and confirmed that it still happens with SVN build r3871.

I saw that thread and it didn't help the first time, but I just re-read it and realised — is DOSBox actually hardcoded so that the unpause button is always the literal keyboard pause button, no matter what? That could explain the problem, then; I was assuming that it would always be a toggle, i.e. you press the same key to pause and unpause. However, it still doesn't give me a way to unpause, since F16 alone (or with any combination of modifiers I've tried) still does not unpause.

1st Test
In the dosbox configuration file, try modifying a line so it appears like so:
priority=higher,pause

Next, start dosbox and then make the window "out of focus", so the cursor is not captured inside dosbox. This should pause dosbox; it may be unpaused by re-activating the dosbox window. This is another test for the unpause function in OSX version of dosbox.

2nd Test
In addition, it may be possible to debug the issue in sdlmain.cpp (don't modify lines yet):

1			case SDL_QUIT: KillSwitch(true); break;
2			case SDL_KEYDOWN:   // Must use Pause/Break Key to resume.
3			case SDL_KEYUP:
4			if(event.key.keysym.sym == SDLK_PAUSE) {

Does "cmd-q" quit dosbox while paused and unpaused? If so, then edit lines surrounding the OSX specific code in sdlmain.cpp:

1if (event.key.keysym.sym == SDLK_q && (event.key.keysym.mod == KMOD_RMETA || event.key.keysym.mod == KMOD_LMETA) ) {
2				paused = false;
3				GFX_SetTitle(-1,-1,false);
4				break;
5			} 

That may test whether "cmd-q" binds to the unpause function. It's difficult to debug without using OSX, so it requires some experimenting at the OSX desktop.