Turn the option off before crossing the finish line...as for the AI not freezing after a while, i have noticed it too but it doesn't bother me since i have enough lead way...might be a problem for some though
There seems to be kind of a time limit to it. What I do is start the race with the option on. Be careful on your take-off, if you bump one of them they unfreeze. Get a few seconds away from them and deactivate the option. When they get too close then activate it again. Rinse, repeat.
It's a little tedious, yes, but it's better than trying to compete with perfect-driving, never crashing, instant max speed, perfectly tuned freaking AI cars.