True, when development was still in its early stages, I was stress testing the game, by just letting a bot drive for about 3600 km. After a while the road and the other cars started to shake and the bot was constantly stopping, instead of slowing down for the corner. That's why I reset the z-position after each stage. I haven't got it 100% seamless though, as you'll see the trackside objects disappear for 1 frame.
The regional problem was an issue before. I called it the lightspeed bug. I've made a file that represented a tire slip curve. Those were values between 0 and 1. The decimal sign was a comma, because I'm from Belgium. But for people from the USA for instance, who use a point instead of a comma, this was a big problem, because the game just skipped the decimal sign, multiplying the values by 100 in the process. The cars went like the speed of light. I solved it back then, but maybe this new issue is something similar.
That mode 7 game shouldn't be too hard to make! But yes, getting an engaging driving model isn't easy. Most of my driving model comes from the drivetrain and straight-line tire simulation, but also the way the car starts to understeer when you go too fast through a corner AND very importantly and the finishing touch: how the car gets slightly more grip when you release the throttle or brake very gently while steering. I got my inspiration from Super Hang-On where the same effect was pretty obvious when you rapidly toggle the turbo on and off. Without this, the driving was rather dull.