I was running into the same problem described here:
http://www.joomlart.com/forums/showthread.php?86143-T3-1.2.4-breaks-Joomla-frontend-editing-and-article-creation-500-error
It looks like 1.3.1 included the fix for this so I updated the framework. I no longer get the status 500 error but my front end editor still does not work. It looks like the page loads just pure HTML and the "Save" and "Cancel" buttons do not do anything.