To the OP, we mostly all agree, the damage model could be better. But until forces are actually absorbed somehow in deformation, which doesn't seem to be in at all yet, we won't see much change in how damage is dealt. To me it seems there's some kind of threshold under which certain amount of damage doesn't happen, that's why small contacts usually don't do much damage, but do make your car rebound around as the forces are exchanged but they are not absorbed by body/frame deformation (that's what I guess from experience). Good example is when you go wide and lightly clip a sidewall like at the last turn at Fern Bay Club, if your rear catches the wall, it just bounces back out (usually followed by the front end hitting the wall too) and you're on your way mostly unscarred.
If the crash is bigger though, you get the damage, but you still bounce back almost as much as the small contact. This is different from what you'd see happening in RL, basicly, for the small and bigger crash, you'll get deformation absorbtion before bounce, but for small clips your body will suffer and rebound a bit like we do now, for bigger crashes, you'll have massive deformation, but less rebound than we see right now. Going head on after a straight in a tire wall, the car crumples until it hits the hard limit (Scawen has made some parts of the car completely static and unalterable) but the forces seem to still be completely applied to the harder core of the car without having been reduced in the other parts' deformation.
I guess we might see something better in the future. For S3, I dream of an aerodynamic model that considers each body panel of the cars as a wing exerting some kind of aerodynamic force/effect, and damage to each of those panels affecting the cars' handling. Even better would be the possibility to lose those panels following rubs, crashes, etc., like having a basic aerodynamic model of the car's frame, but with each panel covering and nullifying it until the frame is exposed. But I'm just dreaming here.
Anyway, if you want to see how quickly you can screw up your car, load up a track with ramps, and take two or three high speed jumps, landing hard on your front and you'll see the suspension dies pretty fast. Some cars, like open wheelers, get completely wrecked in about one jump. That kinda backs my idea of a threshold cause in a race, hitting curbs over and over doesn't seem to affect the suspension as fast as it should.