I'm not racing wheel fluent (I use analog controller inputs, no D-pad stuff), but this sounds like a wheel sensitivity issue. The first thing I would do is try to adjust your wheel sensitivity in whatever game you're in before buying a new wheel completely.
For Forza 3, you may be a bit hosed, but I can't speak to it personally:
Forza 3 Sensitivity Post
To quickly answer the other questions though:
Advantage of 900 vs 270: Realism, especially if you're used to actually driving these cars, and a little more wiggle room when trying to hold a particular steering angle. Otherwise, the only advantage is a lighter wallet.
Dirt: I can't speak to rally games in particular, but real rallycross requires a lot of drifting and rapid wheel transitions. Check out Ken Block for reference, but I'd probably stay with the 270.
Back in the day, I had F-Zero GX for Gamecube, and I always played it with the Nintendo-branded controller instead of the Mad Catz mini-controller I played every other game with for two reasons.
- The stick was stiffer and kinda "sticky", so minor steering corrections tended to cause jerkiness
- The stick is actually shorter and on a smaller pivot, so the larger Nintendo controller had more leeway for holding a particular turn without a minor slip causing disaster
What this means for you is with a 900 degree wheel, you have a lot more leeway to "wiggle the wheel" without throwing the car completely off course if you need to do something like shift or pet a cat or whatever real life concerns you have. However, that also means if you're using all 900 degrees, you're looking at making at least one full revolution either left or right before you "lock". If you want your "steering lock" to be only when you cross your hands over, and not require a hand-over-hand turn like in a real vehicle, you're not getting the most out of the 900 wheel.
All that background to say simply this: you probably can't U-turn well because Forza 3 thinks you have more degrees on your wheel than you actually do.
As a last note, since you're using a wireless controller and most 900s are wired with pedals: You'll want a consistent setup for the wheel and pedals. I bought Steel Battalion for classic XBox and also a $30 table from IKEA just for the controller to rest on. You'll want to do something similar for the clamps on the underside of the wheel itself as well as the pedals.