Yeah, but that could have balancing issues, such as the fact that when I get 3 stars and the police start ramming me and shooting at me, the car doesn't really last very long. Of course, I could just be crap...
Anyway, the modded cars would need to have more hit points. It would also discourage players from taking risks because they wouldn't want their beauty that they lovingly modified to become damaged in any way, and taking risks is what makes GTA fun.
However, I do agree with you on the somewhat repetitive steal car, smash car, steal car gameplay.