I've only recently come across both rFactor and LFS... for what very little it's worth, here's my experiences.
rFactor;
* has tonnes of mods, most of which are crap
* has tonnes of mods, some of which give you a whole new game to play with...
- the Historix mod is brilliant, great physics, great car selection
- CTDP F1 mod is the best f1 racing you can have... screaming around Albert Park in a McLarens has never felt so tight
- Touring Car Legends mod is outstanding, nothing beats thrashing Bathurst's Big Dipper in a Holden
Live for Speed;
* realistic clutch!
* realistic clutch!
* feels like an improved version of GTR5p, devs have done an excellent job of modelling the true physics of a modern car
* realistic engine/gearbox damage! Unlike rFactor, I get punished for driving like a tool rather than just loosening my handling on the 25th lap
* not anywhere near enough cars or tracks, haven't read the forum enough but am assuming the community is not mod-friendly?
rFactor wins only by virtue of the massive modding community out in support of it, but it's a cheap win... because LFS is FAR more realistic and satisfying when you complete a race.
All up, couldn't do without either of them and until something comes along (like rFactor 2) that tops both I'll keep on spinning my wheels
EDIT: Just read up the page... not sure what the policy is on external links here, but I'm in a solid league with XGN (Xtreme Gamers Network) in Australia. Wednesday night alternates between Touring Car Legends and Historix and Thursday is the Porsche Carerra Cup. Brilliant league with some top-class drivers.
NB: to play the historix mod you need the GTR 2 disc (it's the modders way of saying thanks to the old SimBin team as they've taken a lot of the aesthetics from the GTR2 release).