LFS positional interpolation may be state of the art, but at only 4-6 updates per second its very common to see the cars jittering a little when the actual position comes in from the server and it doesn't match the clients prediction.
IIRC Quakeworld entities contain vector information, so they keep moving in the same direction and speed as provided by the last update from the server. And at one update every 13ms or ever less, player/entity movement is utterly rock-solid.
I don't see why increasing the allowable update rate for LFS would be a problem. The dedicated server app is pretty lightweight, and it should be the choice of the admin to set network parameters appropriate for the hardware/network connection it's running on.