Not sure if this is an old bug or not, so i havent put it in the bugs bit.

Has anyone seen the drivers hands go through the steering wheel like this before??

Can happen if the car is deformed enough. Not really a bug, because it's either having hands clipping through the steering wheel or very awkwardly deformed animations.

The car was fairly bent up! I did a couple more laps and it went back to normal again, weird.

Strange, I've never had it myself but wouldn't be suprised if it were possiblee..