Getting back on topic. I still haven't seen an explanation
for why driver induced understeer barely works at all in GTR.

If GTR's physics model is implemented so that lateral force is
reduced at excessively high slip angles, then why doesn't
pegging the steering wheel induce a large amount of understeer?

Somethings up with the physics.

I've tested this in real life on a Trans-Am (front weight bias
car), and a Caterham (rear weight bias car), and it works well
on both cars. In addition, I've seen posts about this method
being used by many club and professional racers.