This argument comes up once every while on Lambda the Ultimate. I want to know where the flaw is.
Take a countable number of TMs all generating different bitstreams. Construct a Cantor TM which runs every nth TM upto the nth bit and outputs the reversed bit.
Now I have established there are uncountably many TMs.
(The argument is that every bitstream is a unique real in the set [0,1]. Since every TM can be seen to be represented by that real, we can use Cantor's construction to prove that there are uncountably many TMs.)
Where does it go wrong?
There are uncountably many Turing machines, if you allow them to use oracles (which are real numbers, really).
But if you disallow that, then the only way that this process gives back a Turing machine is if the enumeration itself is computable. So what you have shown is that the set of Turing machines is not computable (albeit it is recursively enumerable, but that is not enough).
This "liberal assumption" is the only assumption that you make which does not imply "most infinite sets related mathematics is inconsistent", by Occam razor arguments alone it shows that the assumption might be a bit too liberal after all.
As for the suggestion that we make an enumeration for enumerating the rational numbers, sure, you just get (more or less) an irrational number. Showing that one countable set doesn't include all the Turing machines is not a contradiction.