I don't believe it's bottoming out, I'm not sure it's even possible in gt7. I didn't experience this irl, but I imagine if the wheel got slammed by the arch it would lock up and get stuck, while you as a driver wouldn't be able to turn it. It's not what happens here at all. The wheel keeps rotating happily, but the steering wheel suddenly turns left or right. Again, if it was colliding with the arch, it wouldn't be able to turn anywhere. I didn't show it in the video, but if you look from outside it looks just like normal steering, like I'm doing it it on purpose, no mechanical issued visible.
I'm sure it's a bug in suspension forces calculation, which causes an excessive ffb force that actually turns the wheel. (yes I know there is no ffb on controller, but the ffb force is still fed into the controller assist system)