The exhaust model in LFS appears to be a ring modulated waveform (short sample) which basically creates all sorts of resonance. Also its anti-clipping mechanism works like a limiting compressor, it just doesn't send out the audio if it crosses a given volume threshold, however it seems to monitor all frequencies - so even if some range is free of too loud audio and one other range does cross the threshold it will stop the audio. What I still think would benefit LFS is a normal compressor before the limiter, that way the quieter sounds (which in this case tend to be lower frequency too) would have a chance instead of causing clipping and getting removed.
If you play with the waveform sample source you can try this, set the sample to a lower pitch and notice how at higher RPM it starts to "disappear" if you don't induce some modulation to it with the "exhaust pulse tone" setting - however setting that too high if your waveform's dynamic range is maxed out will cause clipping and again it'll just fade out and leave you with the wind noises.
The pisser is that the limiter is applied to the sum of sounds, so if any of your higher frequency sounds like gear whine, air intake, etc are dominating a given range then it'll cause clipping all over again and due to the way the limiter appears to work it's bye-bye audio.