Assuming DNS resolvers work as they should, most bitflips on the wire shouldn't result to anything else than a failed DNS query since DNS packets include the original requested FQDN in the result.

Scenario 1) Lets say we have normal Windows computer asking what is update.microsoft.com as an A-record. The computer's resolver sends its request to its ISP's DNS server it was assigned via DHCP. One bit is flipped on transit and the DNS server receives request to resolve update.mic2osoft.com and it does so. Then it returns the result via UDP telling the Windows computer that update.mic2osoft.com is 1.2.3.4, but the computer's resolver was expecting an answer for update.microsoft.com so it rejects(should reject) the result even though the transaction ID is what it expected. Also UDP checksum poses a problem the recursor could reject the packet and not do anything.

Scenario 2) Another scenario is where the bit corrupts on transit while the ISP's DNS recursor is querying the Verisign .com root servers for microsoft.com (assuming it's not cached) and one bit corrupts in transit. Verisign's server answers that mic2osoft.com DNS servers are ns1.mic2rosoft.com and ns2 and it provides the glue records for them (IP addresses) if necessary. DNS recursor receives an answer for mic2rosoft.com while it expects answer for microsoft.com and rejects the result before querying nsX.mic2rosoft.com. UDP checksum also a problem here.

Scenario 3) Bit flip on the Windows computer's RAM before gethostbyname() is called so they call gethostbyname(update.mic2osoft.com). Another timeframe for a successful bitflip is while the OS is running gethostbyname(update.microsoft.com) but before the request is sent. gethostbyname() only returns the IP address so the function caller will not know if its wrong. This is the most plausible scenario, ECC is also rare in consumer hardware so that shouldn't pose a problem.

Scenario 4) Bit flip on the DNS recursors RAM. This depends on whether the address to be queried is stored in several variables in the DNS server so the DNS answer packet to the Windows computer has the correct FQDN but the DNS server queried for the wrong address due to the bit flip. Servers usually have ECC so this is implausible but not impossible. Also if this happened, the DNS server's cache could also get the incorrect entry and give it out to many many many clients if it was a popular ISP's DNS server.

An interesting thought would be what if IP-addresses bit-flipped. If Microsoft had all their update servers in 80.100.2.0/24 and an attacker owned 16.100.2.0/24 with one bit flipped. How much traffic would the network receive? If bit flipped on transit while the server is returning answer for update.microsoft.com UDP checksum should be incorrect but what if a popular ISP's DNS recursor's cache had a flipped IP address for update.microsoft.com. Very implausible but would result in lot of traffic.

One more scenario comes to mind about IP bit-flipping. If ns1.microsoft.com was at 5.1.1.1 and an attacker owned 1.1.1.1 he could also configure his DNS server (more specifically the UDP stack on the Linux kernel) to ignore the invalid UDP checksums and serve falsified DNS answers.

Seems like the author's DEFCON speak will be held next Sunday, he probably knows much much more about the subject than what I just wrote. I will definitely read his slides/whitepaper.