Cartilage facilitates bone healing structurally much like a suture promotes healing in flesh wounds. Chondrocytes can become ossified as part of the bone formation process. Chondrocytes also provide growth factors to the healing bone.      

Nicholas,

You are right. But I would add that cartilage may also have a detrimental role in bone healing if the fracture fragments are not properly immobilised or the blood supply to fracture site is insufficient or absent. In similar unhappy cases chondrocytes do not ossify and may form the line of non-union (pseudoarthosis).

In bone healing,the progenitor cells react according to the underlying situation.In favorable conditions,they provide bone forming cells.In a detrimental environment(of multifactorial origin),more of chondroblasts/fibroblasts are seen with adverse effect on bone healing.

I think the strain theory of fracture healing answers your question. This theory says that the type of tissue differentiation across the fracture relates closely to the amount of micromotion across the fracture site. Too much micromotion results in fibrous type of tissue, however, rigid fixation promotes bone healing. Also, genetic factors might play a role e.g. poor bone healing in psudoarthrosis tibia as well as many systemic and local factors.

In bone formation and bone healing process, The collagen fibril production in tension led to fibrous tissue, which could then differentiate to intramembranous bone while compression, led to cartilage formation, which could then differentiate to endochondral bone. In his conception bone could only form from cells protected from intermittent stretching by either the fibrous tissue or cartilage.

Please check this reference : BONE DEVELOPMENT AND ITS RELATION TO FRACTURE REPAIR. THE ROLE OF MESENCHYMAL OSTEOBLASTS AND SURFACE OSTEOBLASTS. European cells and materials. Vol 15; 2008