I think we have different understandings about what this fallacy is all about. To me, the fallacy of quantizing the continuum occurs when: (1) the subect being dealt with actually is a continuum; and (2) someone siezes upon an artifically defined segment thereof (a quantum) to declare something about that segment which is allegedly unique to it and not to that segment's boundry regions. For example: "All people earning between $x and $y enjoy bowling, and will vote for my candidate." Probably not a great example, but it gives you the idea. Another: "All second-graders are ready to learn decimals."
The application to biology is readily apparent. If Darwin were right, and all life is related by common descent, then it form a continuum, rather than a collection of discrete groupings we call "species." Thus, even where no intermediate forms are now alive, the theory predicts that they once did live, and perhaps will be found. So finding transitional forms confirms a prediction of the theory, and establishes the continuum. Whereas insisting that each "kind" is and always was unique is an example of the fallacy.
And the answer to the question "Where are all the transitional forms?" is that all species are transitional forms, including us (provided our branch of Life is not wiped out by an asteroid or some similar exitinction event...)