In the parts of the US where inspection is nominal or nonexistent-which is surprisingly much if you live outside California or the Northeast-one simply punches or removes the cat, fixing the problem. Grey market cars cheap CAN be excellent buys if you can pull some shenanigans like this. Worst case scenario: gut the fuel, engine management and ignition systems and put in a LPG tank, hang an Impco mixer off the air metering and figure out a way to run aftermarket distributorless ignition off the stock cam and crank sensors.
Also undersized cats will fail but you would have to come up with some definite statitistics proven with DMV and insurance or fire service documentation for me to believe overheating cats cause a huge number of catastrophic vehicle fires. Charring the carpet, maybe. Total burndowns are almost invariably a fuel leak issue, or in rare cases an electrical short, in modern cars with electric fuel pumps and no shutoffs as on race cars and aircraft.