It's actually very much improved from last years game. Offline... I struggle to find alot wrong with it. There's still some break checking on some tracks, the AI seems to lack awareness of your space on the track at times, but aside from that, its a very well done, fun game. Online is where it struggles apparently. I couldn't comment there though. I've only ran about 4 or 5 online races. 3 of which had people driving the wrong way... but that's not really the fault of Eutechnyx... why people would spend $60 on a game, to go online and do that is beyond me anyways. It was funny though, they'd run the first few laps ok, but then once they were in last, or hit the wall and lost any chance at winning is when they'd turn around.
Anyways, the point still remains. Most of the major issues from the first game they put out have been fixed, but most of the small issues left with IL, are still lingering issues from the first game that just haven't been 100% fixed IMO. If you're going to play offline though, its pretty darn solid IMO. However, it does amaze me how they just can't get it right, even with the patches. It's pretty impressive though what they've done in two years, building from the ground up.
As for other games having patches rejected by MS, I'm sure it happens, but Im sure the devs just dont talk about it. The situation here to me seems that Dave from Eutechnyx is trying his best to keep the community in touch with whats happening, sometimes I think they're giving too much information. You should know as a dev that things can happen, and probably will. So don't set expectations for the fanbase. Don't tell us the patch has been submitted, then you woudlnt have to tell us it was rejected. Just tell us that its a work in progress, set an approximate timeline, then tell us when its ready. I think that's what happens with most devs. Again, just my guess here. Somewhere along the line people have taken the attitude that they need to know every little detail, at any and every point in time, and as it happens. It was never the case in the past with these things. Sometimes, less is more.