I just have a hard time believing that there could be a fire severe enough to incapacitate the crew and cause the transponder to fail, but yet the aircraft continues to fly for five hours afterwards. And how could a fire cause only part of the ACARS system to fail?

Considering what little information we do know, a deliberate act by someone seems more likely than some sort of catastrophic failure. My guess is they may never find the aircraft and we may never know the answer. It took two years to find most of the Air France wreckage and they had a much better idea of where to look.