I don't have a 10D, but several weeks ago I had a chance to play with a Canon PowerShot G3 in combination with my Sunpak PZ4000AF. (Like 10D, G3 uses E-TTL.)
My initial expectations and experience were identical to yours -- no firing of flash at all, even when the flash was set in the manual mode.
[For those not familiar with the Sunpak PowerZoom 4000AF Canon version, it is dedicated to EOS TTL/A-TTL (not E-TTL), though it also features manual modes -- full power and 1/16 power; no flash-based auto mode, however.]
This lead to much research into workings of E-TTL and role of each of the four TTL contacts, etc. (There are many useful webpages on these topics, though none was specifically on Sunpak 4000AF.)
My conclusion is that, for whatever reasons, this particular flash just does not fire at all as long as the "extra" TTL contacts between the flash and the (E-TTL) camera body are maintained. (i.e., this is the normal behavior of this particular Sunpak flash -- though probably unintended.)
Specifically, one of the four TTL contacts on the hot shoe is having this effect of keeping the flash from firing when connected to an E-TTL camera body, even when the flash is set to manual. It is the little "dot" on the left side and closest to the central main "dot" (as you look down on top of the camera, with the camera in your hands in the ready-to-shoot position) that is inhibiting the flash from firing.
I was able to verify this by putting a little piece of tape over this particular TTL contact dot to interrupt the connection, and the flash worked as expected with this temporary modification. (Of course, for regular uses it would probably make more sense to interupt all four TTL contacts, perhaps via an after-market accessory shoe.)
Note that this flash-inhibition effect of the TTL contacts may be particular to Sunpak PZ4000AF (only?). I also have a Sunpak Auto 555 (a.k.a. G4500DX) with an interchangeable EOS TTL dedication module, and G3 worked fine (in manual and flash-based auto mode) with the TTL connections intact.
In any case, these flashes weren't designed to work with E-TTL camera bodies to start with, so I guess we can't complain about any "misbehaviors" when they are forced/allowed to talk to each other via the TTL contacts. I guess they get confused.
For what it's worth, I should have a Digital Rebel to play with by next weekend. I will see if above experience with G3 holds true with DRebel, but something tells me it will.
As for alternatives, aside from the Canon's own EX-series flashes (safe choice), there is at least one Sigma flash that is supposed to support E-TTL.
Also, I understand that Sunpak is supposed to have just introduced or will introduce shortly (at least in the Japanese market) a new flash called PowerZoom 40X, and it will (supposedly) fully support E-TTL flash as well.
http://www.sunpak.jp/products/index.html (This website is in Japanese.)
As always, your mileage may vary.
PS. 4000AF's trigger voltage was 4.95V as I measured it. So it should be safe to use with 10D, as far as that goes.