There is also possibility to make wheels deform (just add wheels as deformable instance in damage.ini check name to add from upgrades.gen it is name of that section for example FL_wheel), but there will be problem with AI drivers still keep going even they have half wheel crunched flat as puncture and detach as well as engine failure values are not same for AI and human drivers, AI drivers seem to have some kind of multiplier like 0.8 for their damage, that is bit unfari, imo.
Also note that collision feelers and collision box affect a lot how damage will look, but using high poly collision box and high level of damage will cause a performance hit on accident event, which one must finetune for online racing use.
So it is not without problems and it will take some time to make it work right, but it is as it is with physics too, more effort spent towards realism gives much more rewarding racing experience.
My damage.xls has not much explanations as I put it together just for my own use, however if one looks trough formulas it should be possible to get idea how thing works.
Basics are that you input numbers to cells from A8 trought to D8 (get numbers from damage.ini) and see effect from H, I and J columns, each row presenting different impact impulse ie. how hard impact is, impact impulses are named hitforce and are at column B rows 16 to 35.
Impact impulse is collision force, to put wheel detach value to 3000 would mean impact strength of 3000, that is what rFactor engine calculates when impact happens, with spreadsheet you can evaluate what kind of effect will vertex damage see, that is how big dent will come to corner of car at given impact impulse and values set to A8 trought D8.
I don't know if that makes it any easier, but often it does require lot of testing, it is quite bit trial and error to get wheels detach properly. Often they don't come off because random is set so that wheel comes off only at 50% of cases, that is good to keep 90-100% range, imo. But make sure test a lot, normal driving, normal accident, purposely done accidents, make sure you don't set it too sensitive so that hitting kerb hard makes wheel come off, unless that is what really could happen. Räikkönen had once wheel tear suspension apart because of flatspot in a wheel, maybe in rFactor 2 such is possible