BtVS: "Surrender" (2/?)

Title: Surrender (2/?)
Fandom: Buffy the Vampire Slayer
Rating: NC-17
Characters: Spike, Faith, and the entire ensemble.
Timeline/Spoilers: Goes AU during “Harsh Light of Day.” Spoilers up to “The Gift.”
Summary: “No,” said Buffy. “I can’t beat you. You win.”
Author’s Notes: For the What If? Spike Ficathon. deadsoul820 asked “What if Buffy had not been able to take the Gem of Amara from Spike in ‘Harsh Light of Day’?” and wanted mayhem and sunglasses. I have (or rather I will) significantly condensed portions of the timeline.

( The Awakening )

DW Question That Has Been Bothering Me Forever

Consider these two facts:

1) In all of New Who, we have not seen any Time Lord other than the Doctor. This is despite the fact that all the Time Lords were time travellers (or at least had the potential to be; presumably some of them stayed home and raised families and didn't go gallivanting through time). As a result of his ending the Time War by wiping out both the Time Lords and the Daleks (or so he thought), the Time Lords no longer have any influence over time and space, because they don't exist anymore. The Doctor is the last of the Timelords. In order for all this to be true, it is necessary that not only do they no longer exist but, in the new altered timestream brought about by the Doctor's actions, they never existed to begin with.

2) Civilizations within linear time remember the Time Lords. Jabe, Mr. Finch, Margaret?

Both of these facts are clearly canon, but I cannot for my life figure out how to reconcile them. They seem like they should be mutually contradictory; if 1 is true then 2 should be false, and vice versa. I understand that Who likes to play fast and loose with temporal mechanics, making stuff up as they go along, and in principle I approve, but this paradox seems to be so glaring that I just can't get past it. Yet there has to be some way to fanwank it, and I wouldn't be surprised if those more involved in the fandom than I am have already come up with some sort of answer. Any ideas?