Disk version of Shift is completely standalone, no game launchers or anything needed. That's what I use myself, since I got the game all those years ago back when it was full price.
In case of Shift 1, you can buy a used disk and install from there. Not sure about Shift 2.
It is called an unpacked game in case of Shift 1-2. You need to do that in order to access game files to install modifications.
Fat PS2 also has a fast disk option that works for a lot of games, although not sure about this one. There are some boards where you are forced to use a PS2 to stay competitive. LRT might be a very good idea here, since there are only a few loading screens, however, in my opinion even IGT would suffice for this game, as the time spent in menus is trivial.
In general, emulation rules for PSX NFS games are not very well defined, and for some reason you are allowed to use very inaccurate emulation that removes slowdowns, and/or massively speeds up all menus.
You confused 100% with max%. These are two very different categories.
None of these things have anything to do with cop or traffic spawns. I already had max cache and swap, yet I still get no cops on Taz, or especially Izzy, but I do get plenty of roadblock bugs. If you want to test spawn differences, try the PS2 or GameCube versions of the game. There is a much higher chance that different platforms will do certain things just ever so slightly differently. Although so far the game seems to behave no different on PS2. Edit: Don't take this as offensive, but if you are significantly slower on races, you simply have more time to get the cops, especially on events where their spawn spots are more limited.