create panel page for taxonomy term page
I was able to get this to work with the latest dev versions of Panels and Page Manager. Here are the key pieces:


Disable the Taxonomy term view.
Set the path on the panels page to /taxonomy/term/%.
Clear cache.
View page at taxonomy/term/{tid}.
I verified that this also works with URL aliases.


One thing to keep in mind: If you use selection conditions (e.g. by Vocabulary), terms that don't satisfy the selection conditions return a 404 (which may or may not be what you want). There is an issue on Drupal.org for providing a default fallback.