It seems to me to take an awfully long time to come to a stop over the kitty litter. Aren't those gravel traps supposed to slow you down a lot more? I slid into one doing maybe about 60 MPH and continued sliding until I hit a wall.
I've noticed a couple other minor issues when taking damage.
1. Bodywork sometimes clips into the tires. This doesn't seem to have any effect on the tires themselves. If there's bodywork cutting into the tires, that tire needs to blow, and quickly.
2. I have seen some thoroughly MANGLED cars manage to limp their way back to the pits after surviving crashes in which the driver should have been KILLED (roof is caved in, driver's helmet is sticking through...sure sign he's a goner) And I should know, I've driven some of those smoking wrecks.

(the in-car view made me a little queasy...) If it's estimated the driver would sustain serious injury or death in the wreck, the race should be over for you. That would probably cut down on a lot of the kamikaze driving I see. (Of course, this should be turned off when hot-lapping, so we can screw up with impunity)
And I'd also like to note, the only time I ever really finding myself hitting the reset button is when I've been in a major crash and flipped the car onto its side/roof. This happens more often than I'd like.