Dear Jonathan,
Something happens at very small scale, probably at the Plank scale. Hopefully we will know what, someday. At that time, we will have more data to see what's the best description of the physical laws, and which of our theories will survive as part of the new theory. Until then, we are free to explore various theoretical possibilities, and see what experimental consequences they may have for the Plank scale. My singularities allow information to be preserved, being therefore compatible with unitary evolution, hence they don't make QFT on curved spacetime inconsistent, as it is thought in general about the singularities. This is the main purpose of the papers to which you refer. Another consequence is the dimensional reduction, which may allow QG to be perturbatively renormalizable. So, there are two links between GR and QM/QFT. In my essays for the latest two FQXi contests I approached the general relativistic part. In the first two, I worked at the other end of the bridge, the quantum one. I proposed there a description of QM which aims to explain the strange quantum properties in a way which is more compatible with GR, by being local (the price is that it has to be contextual). This approach can lead to a rebuilt of QFT (I sketched a long term program for this in the second essay), which combines naturally with GR. These are three connections between the two ends of the bridge: (1) compatibility between the singularities and unitary evolution, (2) possibility of renormalization of gravity, (3) local formulations of quantum mechanics. But the most important part will have to explain clearly why the action is quantized like this (I think that this may be accomplished perhaps by some topological structures, or maybe exotic smooth structure, as two essays from this contest propose). Hopefully, we will see someday what the ultimate explanation is, by a qualitative, nonperturbative answer. I personally am not satisfied to merely prove that they are consistent, I believe there's a deeper, more natural, and simpler explanation.
Best regards,
Cristi