Hot rodders do it all the time (think 30s Ford coupes, for example) and all vehicles have to pass a safety inspection before they can be plated. I'll see if I can find a specific law about it.
To answer your question, and as anyone who watches Formula 1 racing will attest, open wheels can indeed pose quite an issue when they come into contact with just about anything else.
Absolutely. It would have to pass a safety inspection before it could be licensed. Usually these use new mechanical components and then put the old ratty bodies on top so they get this kind of look but they are quite reliable.
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