This actually amazes me. Engine tweaking and Damage is fine. But everyone should be able to start on the same level. Things that increase performance directly should not be implemented, but things that help suit you style may be.
What I am thinking is like increasing the redline to better use the power curves, etc. In actuality, you can already lower the power of your engine, (car in general) in current versions of LFS by cutting down on the air intake (in %) in the 'general' section of the car after the car selection menu.
Engine damage, and stuff like that actually interest me. It sounds like a wonderful idea. It makes us better drivers in general. I remember how I over revved my XRG in I think T1, is it called, to second gear like 40 km/h over the 7k rev limit, where there after, I had no power at all. - Shut Up - It has lots of power, right =D.
In fact, what I've been thinking of (which maybe a good idea, I know some S2erz may think it is a dumbass idea, cause they have S2 already) , is to set up a program in a variety of servers for demo-ers, where everytime you pit and get new tyres, refuel, you pay maybe 5 cents, which goes towards an S2 license, for demo people of course. This may help many of us towards and S2 License slowly, and it will help us learn better driving styles, to preserve tyres, not to be too agressive on our turns thus not crashing, not to over rev our engines all in all, driving our cars like how we would in real life. And what would be good, as many people have said, is where we would need to keep our cars in their current shape and damage. Again, this would serve difficult as the games are run on independent servers.