Noooo, the game engine CAN handle vehicles - players have made both a motorcycle mod (that works) and a vertibird mod (that works). The game world bit being small is viable however.
Yeah but it doesn't work like a vehicle, it doesn't have vehicle mechanics like - you know - wheels spinning. IIRC the modded object just moves at the players command. It's like how the few light switches in the game don't actually turn the lights on but rather replace the off lights with versions of the model that are lit. Try the Vault 21 light switch, you can see the new objects fade in and out. The engine, in short, doesn't accept vehicles, it accepts a vehicle like - but still static - object that responds to player direction.