I think people were to busy writing doom engines to try chucking plain or vertex shaded polys round a track
This sort of game was out of fashion back then, Amigans were feeling their insecurity and trying to catch up with the PC. Of course, now the retro look is cool again
You'd need c2p if you wanted lots of colours
your right, if it was plain shaded, you could probably go 8bit (or less). But if you have vertex colours, you'd need more for the blend. A lot of PS1 games i worked on used vertex colours on a 16bit screen. They looked ok (bit banded, but you can't have everything!)
You could probably use blitter polys for the cockpit, and processor/fpu for the rest.
Of course it will not look as good as this. 320x256 for starters, and less detail. But something like this, for sure.