Some people are having problems, but so far the demo has worked smoothly for me. The UI is similar to GTR, and I've clicked through the menus quite quickly without glitch. I really like the simplistic approach taken by LFS, but GTR2 isn't bad. I find it easier to navigate than rFactor.
Setup took about 2 minutes, selecting my controller buttons, switching it to simulation mode, turning the mirrors on and turning all help off (except for auto clutch). Beyond the GTR2 configuration utility and an nVidia sli profile, I haven't played with video settings.
The frame rate performance is actually, for me, similar to LFS and with a grid of cars, slightly better. At 1920x1200 and Vsynced to 60, I get a solid 60 in single car time trials. This is with DX9 or DX8 and with AA set to level 4. I've not tried the rain extensively, although it did slow a little. As I wasn't impressed (beyond a few pretty effects when watching the replays) by the rain implementation, I can imagine I'll stay away from that option anyway.
With DX8 and a grid of 15, starting from the back, I had about 50-55 fps until the grid spaced out a bit. With DX9, it dropped to about 40 at the start, but was still running smooth. This fairs favourably with LFS, which can dip into the 30s at the start. I'd probably stick to DX8, as it looked fine, and I'm not in huge need for the extra lighting effects.
GTR2 may be making more of my hardware than LFS - I didn't see a huge improvement in LFS when I switched from an Athlon 3200+ with Radeon 9700pro to an Athlon64 4400 X2 with 2x geforce 78000GTX sli. Most other games run way better on my newer system, and LFS probably gained the least. This might just show how well LFS runs (and is optimised?) on lower end systems.