I believe a "standard" easy method to deal with the issue is, that when you detect the collision and penetration (ie. the car is a certain distance inside the barrier) you will "go back" in time using smaller time steps to find the point and time of collision with much higher accuracy and then calculate the appropriate behaviour for that collision, taking into account the time that has already passed since it occured. Currently what looks like is being done is a typical "push the object away from the collision" when the objects intersect, which, with deep penetration, leads to very large forces that throw the car around.
It's pretty much a non-issue for any game today really, maybe around 2015 we'll finally see it fixed in LFS aswell :P
It's pretty much a non-issue for any game today really, maybe around 2015 we'll finally see it fixed in LFS aswell :P