I agree with 1 & 2, reducing either one would solve the problem or reducing both a smaller amount would also solve the problem. Having had my car on the track with slicks last weekend, and unfortunately going off into loose dirt/gravel/grass, I can say that the loss of grip afterwards is much less drastic in real life. I drove off-line for 2-3 corners and everything was back to normal.
For those saying that people are just upset because it hurts their hotlaps, I'd say that I'd much rather be able to actually concentrate on the line and vehicle dynamics than the finicky traction problems that affect LFS.
I've said it before and will hopefully not say it many more times after the physics patch, but if real cars drove like the ones in LFS nobody would ever survive a race.