Its not as bad as you think. Its bad in the light of its not what you want it to be. For what it does, the racing for me is frustrating but rewarding, I use the G27 and it works well after some tweaks. The game does not encourage aggressive driving, it rewards you for clean racing too. In fact you cannot master any of the corners with aggressive driving. Clean racing always gets you more points. But its clearly not for you. As an open minded racing fan I can see what a game developer is trying to do with their game. That's why I can enjoy both Ridge Racer 7 and GTR2. PGR4 and NFS Shift, Grid, Midnight Club 4. Shifts goals wasn't to be the most realistic. Thats like saying PGR4's physic are worse than Forza3 despite it being exactly what the developer set out to achieve, not realistic.
That was the goal. The physics are setup to be a casual racing game experience. The PC version has been modded to handle realistic without re-writing the game code.