Effect of a change of Chinese monetary policy?

I would like to put out a call for some (more?) evidence on the quantitative effects of an appreciation (at the extreme edge, a float) of the Chinese currency. Simon Johnson's post suggests that the U.S. need fear neither inflation nor spiraling interest rates from such an event. I'm a little skeptical about this, and I would like to hear more about evidence supporting such claims. I will now express my prior beliefs, the seeds for my skepticism.

On inflation, who knows? At the very least, the sluggish adjustment of prices would likely mitigate the hurt of the effect on inflation.

But I buy into the Global Saving Glut theory; and if the accumulation of U.S. assets has pushed down U.S. interest rates, then I have to think that the discontinuance (or reversal) of that kind of behavior would work in the opposite direction with the same degree of force. Moreover, Johnson's claim that the Fed can do much to mitigate such pressure seems hollow. The Fed controls some short rates, and can influence long rates buy buying long-bonds. But it is my understanding the Fed's expressed goal is to reduce the size of its balance sheet over the longer term. In any case, I don't think the Fed can counteract global flows on that scale.

In summary, I am more inclined than some to believe that this has the potential to end badly for the U.S. I think U.S. interest rates have to rise, and that rise has to potential to happen very quickly to devastating effect. I think the strongest reason for optimism lies in the impressive degree of control that the Chinese have shown over their currency peg. In particular, it strikes me that the Obama administration ought to be encouraging the Chinese to perform the kind of artwork they exhibited during their managed appreciation from 2005 to 2008. That seems likely to offer the best outcome to all concerned (a certain class of currency speculators excepted).