Yes, cars in Colorado can get pulled over for having rusted holes in the exhaust, but thats an emisions ticket, not inllegally modified.
There are lots of other cars out there that also cause danger becuase they are old, brakes are bad, alignment is way off... tow those cars and make people get new ones dammit!
Just because a car is modified doesn't mean that person is going to street race. Thats just plain dumb. Street racing has always gone on (anyone remember the races in Geece with those muscle cars?) It's American heritage. (I'm gonna get flamed for that one.)