undoing pending changes through visual studio hangs for large number of changes

It doesn't do much - it sends an Undo request to the server and in response receives the data to put on disk. If you have a slow connection to the server or you have a slow proxy (virus scanner, maybe?) then this can slow things down significantly.

If you find this happening a lot, your best course of action is to upgrade to TFS 2012 on the server, Visual Studio 2012 on the client, and then ensure that you are using a Local Workspace. In this case, you need not contact the server to undo.

I have found that sometimes VS is trying to display an 'Are You Sure' pop up message and this is hidden off screen somewhere.
Sometimes pressing Escape or Enter will get past the hidden message and release the freeze.

tf undo from the Developer Command Prompt for VS2012 slightly faster than the IDE.

e.g: tf undo $/YourTeamProject /recursive