On the contrary, this breaks semi-classical gravity's usage of quantum mechanics. The predictions the approximation makes are not compatible with our observations of how quantum mechanics works, and scientists are working on an experiment that can disprove the hypothesis. ( https://doi.org/10.1103/PhysRevLett.133.180201 )

Science is not falsifiability. Science is about continually updating our models to resolve contradictions between the theory and experimental practice. If there is no contradiction between the theory and experimental practice then there is no justification to update the model.

I'm afraid you've got that precisely backwards. Falsifiability is the core of science, as it is the method by which factually-deficient hypotheses are discarded. If there is no contradiction between the theory and experimental practice then either all false theories have been discarded or we have overlooked an experiment that could prove otherwise.

I have seen a mentality growing more popular these days which is that "fundamental physics hasn't made progress in nearly a century."

That's distinctly false. The Higgs Boson was only proposed in 1964 and wasn't measured 'til just 13 years ago.

But my response to this is why should it make progress?

Because we still have falsifiable hypotheses to test.

Why have not encountered a contradiction between experimental practice and theory, so all this "research" into things like String Theory is just guesswork, there is no reason to expect it to actually go anywhere.

We have, actually. The list of unsolved problems in physics on Wikipedia is like 15 pages long and we're developing new experiments to address those questions constantly.

There is no reason to assume the universe acts the way we'd like it to. Maybe the laws of physics really are just convoluted and break down at black holes.

Likewise, there's no reason to assume that the universe is not acting the way we'd like it to except where contradicted by observable evidence. If the laws of physics can "break down" then they aren't "laws", merely approximations that are only accurate under a limited range of conditions. The fact that the universe continues to exist despite the flaws in our theories proves that there must be a set of rules which are applicable in all cases.

And if the rules can change, then our theories will have to be updated to describe those changes and the conditions where they occur.