I think the hitboxes will be more refined than F3s (I was surprised how gross those hitboxes were, reminds me of old FPS where the hitbox for the head was almost as big as the chest appeared to be).
Not quite...
Here's how I figure it played out:
KY wants to put damage on the rally cars for sure and wants to do some pretty impressive damage. Knowing it's a pretty big undertaking he decides to not do it for all 1000+ cars but rather limit it somewhere. Also he has to consider licensing - race cars being smashed up is probably easier to negotiate than production cars. Also with production cars you may have different manufacturers giving different levels of permission, we know KY doesn't like to have things sloppy so he figures no damage for production cars, lets do damage on race cars and do it right.
The level of damage on race cars is pretty impressive and it's believable that doing it to 200 ish cars is much less time consuming that doing it to 1000+ cars baring other issues like licensing.
Later one it seems he is gonna get a lot of flack for releasing no damage on production cars so he says, fine lets do it. Quite possibly again they run up against license issues or something and they do cursory damage. Usually companies don't like their production cars SHOWN too badly beaten up but mechanical damage is probably not a hard one to get in. So we get mechanical damage on production cars too (this might have always been in) and a basic level of visual damage. This satisfies getting damage on the other 800ish cars done in a timely manner and also avoids licensing issues since the cars don't actually deform or have pieces falling off noteably so manufactures shouldn't gripe too much.
So I am not simultaneously saying that damage is both easy and fast and also time consuming and hard, I am saying there are different kinds of damage some of which are more time consuming than others and even the simpler one is not necessarily fast however is probably still faster than the more advanced one (again possible licensing or other issues I haven't touched on involved).
Basically this is what I figure is a rough timeline: around August 09 it was still damage to race cars only, again Kaz directly says this. Gamescon shows damage to the Subi (a race car).
Response to the lack of damage on production cars spurns KY and PD to reconsider their game. I expect this is when KY and PD make the call to take more time and add more features including damage.
By the time TGS comes rollilng around in late Sept KY is ready to announce more damage to satisfy the demands and about two weeks worth of new damage engine work is put into the TGS demo (I believe KY mentions this in an interview somewhere aroudn this time) and the quote you linked to above is the response to the difference between the previous GC build and the TGS build.
The games expected release date of xmas 09 (
https://www.gtplanet.net/gran-turismo-5-march-2010-in-japan/ there is a recap of why that was expected) becomes march 2010 in Sept. I think up until now no release date had been officially announced as KY new he was testing the water with GC, if response was good, 09xmas releaes, if not 2010 release.