Driving it realistically is the way to go. Though you wont go faster after 2 or 3 laps anyway. Restarting the session is currently bugged and doesn't give you fresh tyres like it should, so if you want that "ultimate lap" you've gotta do it in the first couple of laps. The only way to stick new tyres on is to exit the session and go back in again.
All the really fast laps i've seen have been done by left foot braking and revmatching/clutchless downshifting. You can hear the grinding of the gearbox. It's been said that when damage is turned on that will kill the transmission pretty quickly, so it'll be a pointless way to drive races.
I'm driving it realistically as quite frankly it feels like the most realistic simulation of a car I've yet driven . I'm hoping this will be the way to go for the full release with damage on. The 'sim hotlapping' techniques should kill the car quickly by the sounds of things.
Arcade my arse. Have these people ever driven a car?