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A model-based fault-tolerant control (FTC) structure integrating nonlinear feedback control, state estimation, fault detection and isolation (FDI), and stability-based actuator reconfiguration is developed for distributed processes modeled by nonlinear parabolic PDEs with control constraints, actuator faults and limited state measurements. The design is based on an appropriate finite-dimensional model that approximates the dominant process dynamics. A key idea in the design is the judicious placement of control actuators and measurement sensors across the spatial domain in a way that enhances the FDI and fault-tolerance capabilities of the control system. Using singular perturbation techniques, precise FDI thresholds and control reconfiguration criteria accounting for model reduction and state estimation errors are derived to prevent false alarms when the FTC structure is implemented on the infinite-dimensional system. The criteria are tied to the separation between the slow and fast eigenvalues of the differential operator. Finally, the implementation of the developed architecture is demonstrated using a diffusion- reaction process example.