I think the costs involved in a Lemons race car are self-policing. First, there's the People's Curse. Your "$30,000 race car with a bad paint job" would be hard pressed to not get the curse and be wadded up into a big crinkly ball. Aside from that... I know there would be no shortage of people willing to take a 30-minute black flag penalty to do some damage to a car like that. A conspiracy of 3 or 4 teams could easily take a car like that out... permanently.

The only way to take cheating out of this kind of racing would be to make it a Spec race. Like, maybe go buy a mess of retired rental economy cars. Add cages and harnesses. Fresh brakes and tires. Give each team a car at random. Give them a few hours to "prep". Go race!