I got a broken power button and the phone is restored to default firmware. I won't be able to restore it to custom firmware unless I can put it into DFU or wait for the battery to drain out and DFU but holding home button when i attach the USB.

Are there any jailbreak software/tools that does a force DFU or at least a function for me to shutdown/restart my device?

Note that my phone is currently turned on and stuck in default activation/emergency call screen.

Is there any way to turn it off/put it into recovery mode?

http://www.hackint0sh.org/f206/80193.htm
Read this thread to find out how. I tried it and successfully got the phone into dfu but was unable to get pwnage tool to pwn it for me so that I could load a custom firmware. Maybe you will have better luck.

I got a broken power button instead of home button. I just need something that will help me shut down/restart my phone or put it into dfu/recovery.

It doesn't matter. If you read the thread you would see that some of the people there have broken power buttons and some broken home buttons. It is a software solution to getting the phone into dfu mode. My phone had a broken power button too. For recovery mode you can use iliberty to boot it into recovery.

But I am stuck in the activation mode that is seen when you get your phone OOTB.

My only option on Itunes is to activate my sim and there arent any option for restore or anything else.

For recovery mode you can use iliberty to boot it into recovery as I said in my last post. Just go to advanced in iLiberty and click the dfu mode option (it will put your phone in recovery not dfu mode though). From there you can use the method described in that thread.

yeah I read about iLiberty but they don't seem to have the function in v1.0 and the official source for it is no longer distributing the files. Dead end, which version do I need?

http://www.iclarified.com/entry/index.php?enid=849

The second link still works