Absolutely good question. And the answer is not complicated, and it's been written about in many places, but I'll summarise it here in very simple terms.
First, what does infinite time dilation mean?
When we compute time dilation in the usual Schwarschild coordinate system, we imagine a body that is stationary ($dr/dt = 0$) relative to the black hole, and a distant observer (so to speak infinite distant, there is obviously no such thing, but very distant is adequate). The body periodically sends signals to the distant observer at a frequency of say 1 signal/second, or in other words sends a radio burst of 1 Hz to the observer. The observer receives this signal at some frequency, and the quotient of the two is the time dilation. Basically, it is how much slower the observer perceives the body clock to be moving.
Now, this works for all cases as long as $r > r_{EH}$ (event horizon), because it is possible for the body to be stationary relative to the black hole. But as $r$ goes to $r_{EH}$ it becomes harder and harder for the body to do its job. Because the only way to remain stationary is to accelerate, so the body needs a drive to accelerate outwards. Now the event horizon is exactly the distance where infinite acceleration, i.e. infinitely strong propulsion, is needed to keep the body stationary. This is a physical impossibility, expressed by infinite time dilation.
Or, to put it another way, if there were a body with an infinitely powerful engine that stopped on the horizon at infinite acceleration, it would have infinite time dilation for any outside observer. Which is logical, just physically impossible.
But that's one of the important things that tends to cause misunderstandings: gravitational time dilation is only the time dilation of a body in a stationary, continuously super-high acceleration, not the time dilation of a body falling towards a black hole!
The case of a free falling body
More realistic and interesting is the case of a free falling (geodesic) body. Consider a body that simply falls into the black hole in radial free fall (no matter what the initial velocity, as long as it does not escape the black hole)! This body also sends signals to the distant observer and receives signals from it. So now the remote observer is also sending signals. Let the remote observer be Alice, the free-falling be Bob!
The question is, at what frequency will Alice receive Bob's signals and Bob receive Alice's signals?
The answer is surprisingly simple (whether or not it is a rotating black hole): for Bob at the event horizon, the frequency of Alice's signals will be half the frequency at which Alice sends them. Conversely, for Alice, the received frequency of the signals Bob sends will decrease and decrease, and will go to exactly zero as Bob approaches the event horizon.
Crossing the horizon
It also follows from the above that when Bob crosses the event horizon, he will not see that Alice has aged infinitely, and that an infinite amount of time has passed in the whole external world (but this has been discussed here: Does someone falling into a black hole see the end of the universe?). All he will see is that Alice continues to send signals towards him, which he will continue to receive with some frequency. As he falls inwards Bob will continue to receive Alice's signals, he will see Alice. Only Alice isn't receiving Bob's signals, she can't see him.
So Alice will not receive Bob's last signal that Bob sends out exactly when he crosses the event horizon. The ones sent before that she will receive them, albeit with quite a delay and redshift.
But what about this signal that Bob emitted perfectly precisely radially outwards towards Alice on the horizon? Well, this light signal (treated as a point, forgetting quantum physics) will be stuck right there on the horizon. So Alice will never get it, it is in fact infinite time dilation for Alice. (But as we have seen there is no infinite dilation for Bob for any signal from Alice.)
Suppose Charlie jumps into the black hole after Bob! Charlie could send signals to Bob and receive Bob's signals. Charlie can even communicate with Bob, but the signal that Bob sends out over the horizon is only received by Charlie when he reaches the horizon. This is where Charlie will bump into this "stuck" light signal.
What happens next? Charlie and Bob will fall further inwards inevitably, and in the meantime they can continue to communicate, but always in a strange way. Because Bob's outward signals are also falling inwards, it's just that Charlie is falling inwards faster than these signals are falling inwards, so he can still catch them. But here it matters a lot whether we are talking about the unrealistic Schwarschild or the more realistic Kerr black holes... That's not important now.
Speed of horizon crossing
Another interesting question is: what is the speed of a body (Bob) falling freely from infinity when it crosses the horizon? If the escape velocity is exactly $c$ on the horizon (by definition), then wouldn't it be $c$?
Of course not. Or ... well ... the question is meaningless. After all, compared to what is its speed? Compared to Alice? But how can Alice measure Bob's speed if she never receives Bob's signal, which Bob transmits from the horizon to her? So she never sees Bob fall into the black hole.
We have a problem if we want to define velocities globally, because in principle we can only guarantee that the velocity of a body (with mass) is always less than $c$c if it is measured locally. So take an observer exactly on the horizon when Bob crosses the horizon! What will the this observer see?
Okay, but how is the observer moving? If we assume that the observer is on the horizon stationary relative to the black hole, then he/se would measure $c$. But what observer can be stationary on the horizon? There are two:
a) A hypothetical spacecraft with infinitely strong thrusters and infinitely high outgoing acceleration.
b) A beam of light heading exactly outgoing.
Again, a) is unphysical. So b) remains as a possibility. But this is an obvious result: since we already know that the local relative velocity of light with respect to a timelike observer is always $c$.
But suppose we have two bodies that reach the horizon at the same time from the same place, but originally started from different places. They may have relative velocities with respect to each other. For example, one just free-fell in from somewhere, while the other was still pushing forward at a good speed towards the black hole to catch up with the first body. Then, of course, it will be true that the relative velocity of the two bodies will be less than $c$, and also that both will locally measure the velocity of any light ray as $c$. Everything fits.
Waterfall (River) model
To make the whole phenomenon easy to understand, a very useful model is the Waterfall (River) model, presented by its author here in an easy to understand format: https://jila.colorado.edu/~ajsh/insidebh/waterfall.html
It describes the black hole as a space (using a certain coordinate system) flowing towards the black hole, and things in this flowing space move according to their own local velocity. In effect, this model is based on a system of observers radially free-falling from infinity. The model makes Bob and Alice's (and Charlie) situation understandable in a very pictorial way.
I also highly recommend the original article: https://arxiv.org/abs/gr-qc/0411060