Hey, I had the exact same problem, once in my own host and once in a public server. Don't know if the reason in my case is the same as the one you stated though.
I think it would be great if LFS showed your position as <current position>/<total number of racers at this time>. Now it shows only like 1st, but it would be cool to see 1st/22. Already LFS shows the list of current drivers in race when you press N, so displaying the number of racers as denominator should be easy.
I personally felt this info is very convenient. Of course the denominator will change as racers join/spectate/disconnect etc that is fine.
Today in cargame, 2-3 of us tried restricted LX6, then we tried 50%/190/200 kg XFG/XRG for fun. Then all of them joined in and it was great. Then we raced with RB4+50%+200 kg. The RB4(1?)s produced 102 BHP. It was great! coz the UFB's stated bump drafting us. Attached is the RB4 replay. Of course the race had a couple of standard LX4s so thankfully race did not go on forever.
But what else can an admin do to prevent such crashes? I think racers should have been more careful. Another thing I can think of is, LFS should enable tire warming for races just like F1, and we can have a standstill race start instead of pace lap
There could be 2 reasons why you feel that way
1. If the return rate is too high, you might feel like you have to work the steering too much
2. If the limit multipler is too low, again you might feel like its understeering or nonresponsive.
So apart from increasing steer rate, try to:
1. Decrease return rate - to around say 50% of your steer rate
2. Increase limit multiplier to say 1.05 instead the default 0.80
But having said that XRG and XFG are no F1 cars and they have 720 degree lock, and these cars do not like sudden direction changes and you can't expect them to be too responsive, smoothness is the key.
Try http://www.setupgrid.net/1/setup/sprint also. As far as cars with restrictions (UFB, GT3, GT2 etc) are concerned, in my experienced the best sets I have got are by requesting fast players on the servers to share their sets.