I would still stick with C for Q20 as it the most unambigous option. I think you guys are reading too much into it. Option A is too open, the paucity of the fossil record leaves it open to intepretation, not explicity suggesting pertinence with the idea of punctuated equilibrium. Transitional forms suggest RAPID change, darwins theory of graduality suggests, slow, gradual change, where such transitonal fossils would not be in the record. This is because the change occurs so slowly (think the development of homosapiens).
So, C would be the BETTER answer, which is the exact principle on which the HSC multiple choice is based on.