I actually agree that LFS should focus on the RACING and not the tuning side of things and it's obvious most LFS's do to

thats why the community is in general so generous with sharing sets... the problem is if it is to be a Sim it needs to be realistic in as many details as possible (within the constraints of current technology of course)
The idea (engine tuning and car tweaking) has good and bad side effects though (the same as suspension tunning)
Without any type of tunning (suspension or engine) it would be pure driving skill (the ability of the driver to adapt to the situation to get the best performance out of the car) this is good for public online races, but has the downside of the driver must adapt his driving technique to get the most out of the car (which sometimes can be difficult especially with the variations in controller choice, etc.) Also the other downside is it is quite difficult to get car pairs that work well together on all tracks (i.e. XFG/XRG, XRT/FXO, etc.) so you end up with mainly one car classes again (although it might be easier if they took away all or most of the suspension settings

).
With engine tunning (which could be as simple as two or three engine choices like we have with diff's) it maybe easier for the developers to balance the car classes on all car/track combos

.
As has been mentioned, in RL most race drivers don't know how to tune engines or suspensions (although many do learn as much about it as possible) they have engineers, mechanics and pit crew to take care of these details... (which is why many good set builders in LFS share their sets willingly, they want to encourage good close racing)... but this is one side of racing that makes the sport very interesting in RL, the choices and decisions the Team make ultimately see them at victory lane or not, and this can be simulated in LFS quite well in league racing
I don't think it would be unreasonable that when LFS is completed (S3 and beyond) that teams entering leagues would have a race engineer, team manager, etc... this is what real life racing is about it's a team sport not individual pursiut as alot seem to think...
MS Flight Sim springs to mind here, it attracts real life pilots because of it's realism, but also attracts others who like to fly but also have an interest in the other areas of aviation also (like traffic control) there is a whole segment of the community devoted to giving the pilots of the sim an ultra realistic traffic control system

so it's like a sim in a sim
So what I think would be the best of both worlds (which I know would be complex and very time consuming to implement, thats why I say S3 or beyond) would be, have maximum complexity in tunning and adjustment settings for everything to do with a car, but also have a virtual race engineer. In real life race drivers tell there race engineers how their car is responding and the race engineer makes adjustments accordingly based on his knowledge of how that particular driver drives. This could be done even via a third party application I guess, like the replay analysers. That way people could choose to tweak their own sets or have the "virtual race engineer" do it for them, I'm sure the community still would be as generous as it currently is, so it wouldn't mean starting from a stock set, you could still download someone elses set as a starting point then have the VRE tweak the set for a particular track driver style

alternatively a team could recriut a race engineer... I could even envisage that interested people (like traffic controllers in MS FlightSim) could setup services where by they offered Race Tunning of cars for individual drivers

(sim within a sim)

I know I'm a dreamer

but you never know it could happen