The point is that even with only moderate intelligence, if you speed that intelligence up enough you can potentially have a lot of gains. Thus for example, if you took a moderately smart human (say an average Less Wrongian) and were able to think a hundred times as fast, they'd be pretty damn productive, even if their overall creativity was not that much higher. Now, we don't know what the minimal processing power it takes to create an intelligence. Imagine for example what it would turn out if you could simulate in realtime an intelligence of about a human on an old 486 and that the main issue was just figuring out the algorithms. That means, that a cheap commercial machine computer now can run that AI at around a thousand times as fast as a human. Now, you may object that you find it implausible that an AI would be able to run in real time on a 486. That's ok. Do you think it is plausible it could run on a machine today if we had the algorithms? Ok. Then imagine what happens if we find those algorithms 20 years from now. The same end result. Unless you believe that we will coincidentally discover how to make general AI at about the same time we have precisely the processing power to run them, they will likely be quite fast little buggers.

"People seem to make a leap from "This is 'bounded'" to "The bound must be a reasonable-looking quantity on the scale I'm used to." The power output of a supernova is 'bounded', but I wouldn't advise trying to shield yourself from one with a flame-retardant Nomex jumpsuit." - http://lesswrong.com/lw/qk/that_alien_message/

Only a small fraction of Singularitans believe that a hard, fast take-off will occur in a matter of hours. Eliezer for example believes that is likely. But that's a claim that isn't at all relevant to whether AI is a "magic key." The notion of repeated singularities at ever increasing pace is not one that is generally argued. It seems like you are confusing it with a Kurzweil-style Singularity. It might help to read up on the different types of Singularities envisioned. For a very brief breakdown, see Eliezer's remarks here

I'm deeply puzzled by your remark about "time wave zero." Time wave zero is a New Age idea originating from Terence McKenna and connected deeply with 2012 claims.That has nothing to do with the Singularity other than the very superficial similarity in the claim of imminent large-scale changes to human society.