the problem isnt lfs physics but damage modeling. in real life the car would have been broken beyond any drivability. suspension etc would have been broken rather than bent and engine/fuel/aspiration would have been disrupted. lfs doesn't model totaled cars yet and so its possible to capture these bizarre behaviours, but within normal parameters, lfs physics are king.
i think it's because only the dampers are damaged in lfs, so without the dampers you get the lowrider effect. Ever been in an old 70's car or older? with the rubber blocks for sus and no dampers, funny as heck but a definate back breaker