I think you should try to make a few of your options happen. Definitely study hard for the GRE, try to publish, try to keep your internship, and if you can squeeze it in, go to Michigan. However, I think Michigan should be the last resort option.
I was a sub 3.0 grad applicant. The school I choose to get my first masters was the only school in town that offered the program and I couldn't leave. Thankfully, their admissions requirements weren't overly strict. I did really well on the MAT and was admitted on a probationary period. When I finished the semester with a 3.8 GPA, I was removed from probation. I went on to graduate with a 3.83 overall and got into wonderful schools. Sometimes it takes a redemption degree, and it seems like you're already working on it.