Spontaneous Dimensional Reduction
Carlip is probably best known for his article in Scientific American on similar themes. There he played with a 2+1 dimension "Flatland" universe; here he is seriously proposing a 1+1 one.
It's not as crazy as it sounds. In fact, I find it quite promising.
In a nutshell
Discussing the last point, he suggests that spacetime at small scales "spends most of its time" in or near a Kasner solution, a anisotropic solution to general relativity that applies in 3 dimensions or more. He argues that Kasner solutions favor 1 dimension - strongly so if contracting, less strongly if expanding.
Elsewhere he argues that focussing effects dominate, albeit in a slightly different context. This would imply that the contracting state dominates, which is basically what he needs for this to work. To my knowledge he hasn't explicitly applied this to 1+1 dimensions - that puzzles me, since the two ideas of his seem to fit each other nicely.
Kasner solutions are vacuum solutions - solutions that only apply to empty space. Carlip argues that by looking at extremely small scales, spacetime is effectively flattened.
At larger scales, he says that expansion and contraction change repeatedly and choatically, the general idea being a Mixmaster universe or a BKL singularity. The familiar 3 spatial dimensions are built from 1-dimensional pieces not unlike tinkertoys are.
Scalar propagator for gravity
My guess is that the other fundamental forces might also see a solution without renormalization from this. Nobody really likes renormalization, it's just been a neccessary evil in quantum field theory. Presumably that'd happen at an intermediate scale that has 2+1 dimensions.
The hierarchy problem
This offers an answer. By way of background, gravity requires 3 dimensions in order to propagate: 1 dimension of travel and 2 transverse dimensions. That's because it's a spin 2 force, which is why its propagator is a rank 2 tensor.
So spontaneous dimensional reduction says that gravity can't propagate at all at small scales, only at large scales. This may be enough to explain the hierarchy problem. (That's me conjecturing this)
"But wait", you say. "If it can't propagate at small scales, how does it get anywhere at larger scales? That's like saying, I can't walk three feet but I can walk a mile. Surely the big journey is made of little journeys?"
Well, what Carlip suggests elsewhere (here he may be summarizing others' work) is that for reduced dimensions, what happens instead is that gravity rearranges the topology of space, presumably affecting the BKL or Mixmaster behavior. This may be enough to let it propagate.
The self-energy problem
But (me again) in a 1-dimensional space, that doesn't happen. Forces go as 1/r0, which is to say they are insensitive to distance. No self-energy problem.
Further, there's helpful logic in the other direction. Why does spacetime do this at small distances? Why a Kasner-like solution instead of a simpler isotropic solution? Because if it didn't, then there would be infinite forces at small distances. If we don't need renormalization, we can just say as a principle that energies can't be infinite and then we'll find that 1+1 dimensional Kasner-like spacetime is needed at small scales.
Potential for insight about dark energy
If Carlip's theory wrt Kasner solutions is true, then at small scales space is constantly expanding and contracting. This suggests (me again) some relation to dark energy. Maybe it's as simple as whether contraction or expansion dominates at that scale, and by how much.