What is happening in France?
One of the best summaries and explanations of the current unrest that I've read is on Dangereuse Trilingue.
"Well, and then "foutre le bordel" ("creating a disruptive mess" or "fucking up everything", take your pick for a translation) is in a way a rather French response to social dissatisfaction. However deplorable, however inexcusable, this is not the first time in history this sort of thing has happened."
Which echoes my thoughts. This sort of political violence (broadly very controlled - the targets have almost entirely been property rather than persons, and the one death may have related to a pre-existing grudge rather than the events themselves) is pretty well a French tradition - farmers, anti-globalisation protesters, unionists often engage in similar, if slightly more formal "protests".
Who says the young inhabitants of the banlieues have been inadequately assimilated into French culture?
As for the foreign media coverage, you have to remember that a burning car is just about an irresistible image to a sub-editor looking for an image for a colour page (and I should imagine for a television editor). These are the sorts of things that can have an enormous impact on how the news is reported.