The term wasn’t about Japanese drivers, it was about Japanese cars. They were called “rice burners” as in they were fueled by rice, not gasoline. I guess that was someone’s joke that became wide spread.
You’re right that it was sort of derogatory to refer to cars that had all their customization on things like giant exhausts, huge wheels, neon lights, rather than performance improvements.
I’ve never heard the term used to refer to the ethnicity of the driver, just the ethnicity of the car, so I don’t think it’s racist, shrug.
How about “pasta” then? That way it’s explicitly Italian instead. Or casserole? That actually kind of works, it’s a bunch of parts you mix together and bake to get something cool at the end.