The existing limits in games are often based on underlying technology, ie. the programmer usually try what largest value still works correctly and then uses something slightly lower as limit.
Maybe it was just some limit which did look right to Scawen and can be easily raised, but with 100Hz physics engine and current tires I wouldn't be completely shocked if the limit is actually near what the engine simulates reasonably and going beyond it would cause some stuff to break.
That said the 1000Hz physics experiment may help a bit with some cumulative integration errors making the physics less prone to "explode", although it will also make many values to operate in smaller values which may lose some precision on bottom instead, causing new issues elsewhere.
But I would guess (with very limited knowledge, I did myself only trivial physics simulations, nowhere near the car-physics) something like very strong engine may be one of those points where 1000Hz is slightly more stable than 100Hz simulation.
EDIT: or maybe this is not related to physics simulation at all and 500kW limit was just nice for the UI/editor.