I finally had to register for the forum after lots of lurking to chime in on this thread. My son is 4 1/2, and he is fanatical about all things motorsports. We'd tried a lot of things to try and get him to play GT5 and have fun, but this thread really helped out!
Last night, I took the Cappucino that I'd already souped up for the seasonal event and told him it was "his car". We went and got the race modification done, painted it (Chameleon Blue, I'm going to miss that paint chip

), put on custom wheels and painted them, then went back to the tuning shop (to prove to him it was already loaded) and added the racing/softs.
Then we went to one of the level 0 races, Sunday Cup or something like that, and got him behind the wheel. I have a DFGT, and even with force feedback turned way down he still complains that "the wheel is making me go that way" so on the advice I found on another post, I unplugged the AC adapter from the wheel - now there's zero feedback! (The downside is it's not self-centering, so if he gets really spun around sometimes he can't straighten out. Also, unplugging the wheel is very helpful when grinding endurance races, fyi.)
He lost his first race by 1m54, lost his second by 0m48. He was frustrated but I worked with him until he learned to get off the gas when he could see a turn coming, and get back on the gas when he could see track ahead. His next race (Tsukuba) he won by 0.07 seconds, he had a lead of 4+ seconds but he got nervous on the last lap (don't we all!) I was super excited for him and he was so proud! We saved the replay so we could show Mom.
It's great, because now he wants to play "Daddy's racing game" instead of constantly trying to get me to play Cars Mater-national. Watching my four year old mini-me make a nice clean line of a moderate corner is super cool.
I shall call this new form of family entertainment "C-Spec". It's perfect, since my son's name is "Chase"!
Anyway, thanks for the thread, and the suggestion on the Cappucino. He still wants to try every other car in my garage, but since we did the Cappucino up just the way he wanted it, and he's won with it, he now has a soft-spot for that car - so hopefully he'll keep coming back to it until he improves his skills a bit more.