Becky,
Your words are true. While having the vehicle dynamics nailed is a lofty goal, it's a goal that I fell is unobtainable so long as we are applying them to a static environment. So much of a cars feel has more to do with how the car is reacting to the environment then how the different parts of the car are reacting to each other. How many of the physics updates have been aimed at improving the driving feel of the cars, especially at and just over the limits?
The answer is a lot. Many of the perceived weird feelings in the physics are most likely due to the environment not an incorrect vehicle dynamics model. I would be willing to argue then even back in S1 the physics were close enough to start working on the dynamic aspects of the environment. In the real world which is what sims are trying to simulate, everything in is constant flux. So when we drive our exceptions of how the car is reacting is going to be different then the exact same car in LFS.
In essence every time we tweak the physics to feel more natural we are in fact pushing the physics simulation away from being correct by adding in components that alter the physics to replicate the feeling of driving in a dynamic environment while driving in a static one. In essence it will never be possible to build a correct physics simulation of driving/racing so long as we are building it in a static environment with glass smooth roads, unchanging road surface conditions and unchanging atmospheric conditions.
The environment simulation is the base on which it all needs to be built, without that the rest is just another neat game that feels better then the others. There is currently no sim that has taken this approach. iRacing is closer but it still uses a static environment but at least its tracks surfaces are not like glass, they have character, imperfections and variations in camber/grip. I have yet to see a track surface in LFS that has a crown, uneven surface or difference in grip based on track surface type.
You have a good base but its no where close to where it could be. Keep it up and perhaps it will be what you hope it to be.