In what ways do you feel the physics engine should be improved? You don't feel a livery and track editor could be patched in? I agree that there should be a way to bypass the grind.
The physics could use some help just about everywhere, we even have people debating whether or not the suspension tuning is backwards after playing the game for over a year.
However, the biggest issues with the existing physics are aerodynamics, damage, and tire modelling (as mentioned by slip stream). Wings do not behave realistically. I don't expect the PS3 to run CFD in real time, but at the very least, we should a realistic trade off between downforce and drag so that tuning isn't about setting your wings to max angles. Slipstreaming was updated after being blatantly wrong for years, but now that the strength of the effect has been improved, secondary factors like turbulence and loss of lift/downforce should be added. Along with this, cars should have accurate downforce magnitudes and this information should be displayed in real units that people can understand. 1950's race cars should not be glued to the road by two tons of downward pressure, and modern LMP's should have more options than "rear = 70" (70 what?).
Damage was recently added fine, but it was pretty limited. Visually, nothing really happens unless you drive into a bomb. Mechanical damage is extremely simplistic (and completely absent outside of online), and even if you set up or enter a very long race, your pit stop options consist of one thing - magic damage repair over a constant span of time.
Slipstream covered tires, they have constant grip, there is no weather modeling except for rain (temperature is extremely important), tire damage/wear seems to be the same everywhere on the tire we can't change things like tire pressure. For a game that calls itself a simulator that has gone through more than 5 iterations, it's a bit disappointing.
A livery editor and track editor could be patched in, but I feel that they would be better spent on a new game at this point, plus. Especially since coding them into a game that was not meant to have them could prove difficult.
Outside of all of these things, there are also some other factors, like GT's very poor simulation of racing itself. A racing game without qualification is kind of crazy. Also, we have Super GT and NASCAR, but none of their rules. Many races have completely mismatched cars in direct competition and, the tuning system is left underutilized because we don't have to take a humble road car and build it to a certain spec. Pretty much, it's either stock or you get to super tune your car. On top of that, you don't know what you'll be racing against so getting a good race becomes trial and error.
Gran Turismo has really been slow to evolve. The problem is, it's been the same game for too long and it has not tried to adapt or borrow from others.