As in Chris Godsil's answer, I will use $A$ to denote the adjacency matrix and $\Delta$ to denote the diagonal matrix of vertex degrees.
A pretty standard inclusion-exclusion approach can be formulated as follows. Define $P(a,b,n,\{j_1,\ldots,j_k\})$ to be the set of paths from $a$ to $b$ of length $n$ in which each of steps $j_1,\ \ldots,\ j_k\in\{2,3,\ldots,n\}$ reverses the preceding step. Then the number of paths of length $n$ with no reversals is
$$
\lvert P(a,b,n,\{\})\rvert-\sum_{j=2}^n\lvert P(a,b,n,\{j\})\rvert+\sum_{2\le j<k\le n}\lvert P(a,b,n,\{j,k\})\rvert-\sum_{2\le j<k<\ell\le n}\lvert P(a,b,n,\{j,k,\ell\})\rvert+\ldots
$$
The task now is to compute $\lvert P(a,b,n,\{j_1,\ldots,j_k\})\rvert$ for general $\{j_1,\ldots,j_k\}$. We know that $\lvert P(a,b,n,\{\})\rvert$ is the $(a,b)$ element of $A^n$. Since a reversal in step $j$ implies that the same vertex is visited after the $(j-2)^\text{nd}$ and $j^\text{th}$ steps, $\lvert P(a,b,n,\{j\})\rvert$ is the $(a,b)$ element of $A^{j-2}\Delta A^{n-j}=A^{j-2}(3I)A^{n-j}=3A^{n-2}$.
Things get harder when there are multiple reversals. Consider the set of paths with $k-1$ consecutive reversals, $k\ge2$, starting in step $j$,
$$P(a,b,n,\{j,j+1,j+2,\ldots,j+k-2\}).$$
If $v_i$ is the vertex visited after the $i^\text{th}$ step then $v_{j-2}=v_j=v_{j+2}=v_{j+4}=\ldots$ (call this the even sequence) and $v_{j-1}=v_{j+1}=v_{j+3}=v_{j+5}=\ldots$ (call this the odd sequence). In the case that $k$ is even, the vertex visited after the final reversal, $v_{j+k-2}$, is in the even sequence. This situation is similar to the $k=2$ situation analyzed in the previous paragraph and the number of paths is the $(a,b)$ element of
$$
A^{j-2}\Delta A^{n-(k-2)-j}=A^{j-2}(3I)A^{n-(k-2)-j}=3A^{n-k}.
$$
If $k$ is odd, then $v_{j+k-2}$ is in the odd sequence and the number of $k$-step paths joining $v_{j-2}$ to $v_{j+k-2}$ is the same as the number of one-step paths joining $v_{j-2}$ to $v_{j-1}$, that is, it is given by the adjacency matrix. Hence the number of $n$-step paths joining $a$ to $b$ is the $(a,b)$ element of
$$
A^{j-2}AA^{n-(k-2)-j}=A^{n-k+1}.
$$
In the most general case we have to handle sets of paths having multiple sequences of consecutive reversals. A set of reversals containing multiple sequences can be reduced to the lengths of the sequences. So, for example, if $n=10$ and the set of reversals is $\{2,3,4,6,9,10\}$, then this set can be represented as the sum $4+2+1+3$ since
- in steps $1$, $2$, $3$, $4$, step $2$ reverses $1$, $3$ reverses $2$, and $4$ reverses $3$;
- in steps $5$, $6$, step $6$ reverses $5$;
- no subsequent step reverses step $7$;
- in steps $8$, $9$, $10$, step $9$ reverses $7$ and $10$ reverses $9$.
A second example: the set of reversals $\{3,6,7,8\}$ is represented by the sum $1+2+1+4+1+1$ (again with $n=10$). The set with no reversals is represented by the sum $1+1+\ldots+1$ ($n$ terms). Since each reversal added to the set merges two terms in the sum, a set of $r$ reversals is represented by a sum of $n-r$ terms.
We now see what needs to be done to compute
$$
\sum_{2\le j_1<\ldots<j_r\le n}\lvert P(a,b,n,\{j_1,\ldots,j_r\})\rvert.
$$
Represent each set $\{j_1,\ldots,j_r\}$ by a sum of positive integers totaling $n$. The number of length $n$ paths from $a$ to $b$ corresponding to that set equals the $(a,b)$ element of the product $3^eA^o$, where $e$ is the number of even terms in the sum and $o$ is the number of odd terms in the sum. Examples: the length $10$ paths with reversals $\{2,3,4,6,9,10\}$ are enumerated by $(3I)(3I)AA$; those with reversals $\{3,6,7,8\}$ are enumerated by $A(3I)A(3I)AA$.
It remains to enumerate sums of $n-r$ positive terms totaling $n$. The answer is a binomial coefficient, but we need to enumerate our sums according to the numbers of even and odd terms. Here's where things get messy. Make the definitions
$$
\begin{aligned}
\mathcal{E}&:=\text{sum of even terms,}\\
\mathcal{J}&:=\frac{1}{2}\mathcal{E},\\
\mathcal{O}&:=n-2\mathcal{J}=\text{sum of odd terms.}
\end{aligned}
$$
Note that the parity of the sum of the odd terms is the parity of the number of odd terms. Hence $\mathcal{O}-o$ is even and we define
$$
\mathcal{K}:=\frac{\mathcal{O}-o}{2},
$$
which is the sum of the numbers obtained by subtracting $1$ from each of the odd terms and then halving.
This implies
$$
\begin{aligned}
o&=\mathcal{O}-2\mathcal{K}=n-2\mathcal{J}-2\mathcal{K}\\
e&=n-r-o=2\mathcal{J}+2\mathcal{K}-r.
\end{aligned}
$$
Since $\mathcal{J}$ is the sum of $e$ positive terms, $e\le\mathcal{J}$ and therefore $\mathcal{K}\le(r-\mathcal{J})/2$.
Now by a standard stars-and-bars argument, the number of sums of $e$ positive even numbers totaling $\mathcal{E}$ is
$$
\binom{(\mathcal{J}-e)+(e-1)}{\mathcal{J}-e}=\binom{\mathcal{J}-1}{r-\mathcal{J}-2\mathcal{K}}.
$$
The number of sums of $o$ positive odd numbers totaling $\mathcal{O}$ is
$$
\binom{\mathcal{K}+(o-1)}{\mathcal{K}}=\binom{n-2\mathcal{J}-\mathcal{K}-1}{\mathcal{K}}.
$$
In forming the full sum, the even and odd terms may be interleaved in
$$
\binom{o+e}{o}=\binom{n-r}{n-2\mathcal{J}-2\mathcal{K}}
$$
ways.
Incorporating these results in the inclusion-exclusion sum gives the result that the number of length $n$ paths from $a$ to $b$ with no reversing steps is the $(a,b)$ element of
$$
\sum_{r=0}^{n-1}(-1)^r\sum_{\mathcal{J}=0}^{\lfloor n/2\rfloor}\sum_{\mathcal{K}=0}^{\lfloor(r-\mathcal{J})/2\rfloor}3^{2\mathcal{J}+2\mathcal{K}-r}A^{n-2\mathcal{J}-\mathcal{K}}\binom{\mathcal{J}-1}{r-\mathcal{J}-2\mathcal{K}}\binom{n-2\mathcal{J}-\mathcal{K}-1}{\mathcal{K}}\binom{n-r}{n-2\mathcal{J}-2\mathcal{K}}.
$$
Discussion: This answer is not so nice as the answers that have been given by Chris Godsil and Ross Millikan, but I wanted to see how things would work using a contrasting method. As in the method used here, Chris Godsil's answer uses inclusion-exclusion. It does so by building the set of length $n$ paths with no reversing steps by extending a set of shorter paths from which reversing steps have already been excluded. The resulting formula involving Chebyshev polynomials can be expressed in terms of relatively simple single sums, as discussed in a followup post. In contrast, my method produces a somewhat unpleasant triple sum. The main reason I can see for the simplicity of Chris Godsil's answer is that in none of the terms of the inclusion-exclusion sum do you have reversing steps that "interact", that is, that are consecutive, whereas in my solution this does happen and must be dealt with.
Addendum: In my answer to the followup post (scroll down to see the new answer), I derive the sum you get from Chris Godsil's answer using the principle of inclusion-exclusion nonrecursively. Instead of the sets $P(a,b,n,\{j\})$, I start with sets of a slightly different definition, chosen so that sets that have consecutive labeled reversing steps, such as $P(a,b,n,\{j,j+1\})$, are empty. The simple single-sum form of the answer then falls out naturally.