if you want better physics you should try drift 2 which was an attempt at being a touge simulator, with an arcade feel which was just a lot of fun.
not LFS quality physics but still awesome, and probably best on console so far since it was the only thing that managed to capture proper braking, unstable feeling, gravity changes with handling with elevation, etc. and having a drift mode, realistic touge tracks and a storyline is awesome. Want more awesomeness, the turn off headlights, flash high beem tricks actually work on the AI in this game. If it had multiplayer it would be really fun doing that to opponents.
the shoutoku series is awesome too but in a different way. driving thru traffic and flashing headlights. TXR3 just had the best AI in a console racer and the water/oil temperature gages are something that no simulator has included. It actually had better physics than GT4 which called itself a real life simulator too, since braking mid corners get your cars sliding, and countersteer properly to avoid it, and you can't go over 150mph easily.