The Cosmic Censorship hypothesis suggests that gravitational singularities will always be hidden from the view of an external observer by an event horizon. It's sometimes given the status of a 'fundamental principle of the universe', though there's no particularly solid reasoning behind this (as far as I'm aware, at least).
This short paper explores a gedanken experiment that attempts to violate cosmic censorship.
Andy Lawrence suggests that the unaccounted for UV flux in AGN spectra could be coming from "clouds" of gas orbiting the black hole at ~10 Schwarzschild radii, and reflecting light as UV line emission which all gets blurred together to make a broad continuum due to the insane speeds involved.
I saw Andy yesterday at the Edinburgh sims workshop - he agreed that his clouds were probably shreds, but all that really matters is the filling factor and ionisation state, and the code he used to play around with it all is called "cloudy"... I told him we found the model pretty plausible (stuff comes off accretion disks and stays in orbit, absorbing and emitting, fine), his hope is that someone makes a more detailed model, checks his results and does some inference. That'll be Lance then...