I agree with half of what you have written, grip is not in PP since tire choice doesn't affect PP, whether you use RS or CH tires I think PP remains fixed.It's not hard to figure out what's wrong with the PP system as far as I can tell. It undervalues grip and rotation, and overvalues power. All the best performing cars are the ones with higher grip and good rotation, most of the worst performing cars are low grip and often difficult to rotate although that's not always the case. They did fix it somewhat by shifting grip to the tire model for GT6 and away from the chassis, which makes many of the older cars more competitive. If the RX500 were in GT5 for example it wouldn't have nearly the grip it does now, same with the Ferrari 250GT, Dino etc. there's no way they would have been competitive in GT5, only a couple of classic cars were because they lacked grip. Of course now they have unrealistic amounts of grip for their era, but are competitive in PP races.
To fix the system, cars need to be given more PP for grip, and less PP for HP IMO, although fixing the former, will likely fix the latter.
As to rotation, yes, I suspect Polar Moment of Inertia is a factor, but not correctly applied; the smaller more compact cars do better with same PP, ie the Lotuses, GSX, XBOW, ZZII, these cars should score higher PP than they have,