The safety regulations aren't the problem with the Fortwo, actually. The US W451 Fortwo isn't appreciably heavier than the European W451, and there were some W450s that were legally certified to come into the US, although at extensive cost increase due to the economies of scale of the modifications (as I understand, they were minor modifications, and more nitpicking than anything - had the W450 been designed for the US from the outset, it wouldn't have been any more expensive). All W451s are heavier than the W450, but it's also a somewhat bigger car for other reasons than safety.
The problems are threefold: emissions, the NEDC being very optimistic (and EPA being slightly pessimistic on gasoline and rather pessimistic on diesel engines), and the Fortwo concept AND implementation in general sucking for what it's being used for.
US emissions standards make it very, very difficult to use a truly efficient engine, because high efficiency engines (diesels, lean-burn gassers) tend to spew nitrogen oxides. Difficult doesn't mean impossible, but it DOES mean expensive.
So, what's wrong with the Fortwo concept? It's designed for ONE thing, and one thing only: being extremely short wheelbase, so two can be parked in a single parallel parking space. That's IT. And, that works great in heavily populated cities, like what's common in Europe. However, it's a side-by-side layout out of necessity, which tends to increase weight. It's also tall to maximize occupant comfort with the short wheelbase - you can use height instead of length to get additional legroom - but that increases frontal area. And, the shape of a very short wheelbase car like the Fortwo provides very little room for streamlining, so drag coefficient is rather high.
As for the implementation, the transmission is awful, the ride quality is dreadful (although a lot of this is due to the short wheelbase), it has parts commonality with just about nothing (meaning you're stuck buying things from the dealer a lot of the time, and it's a Mercedes), servicing can be a nightmare due to the engine placement, and what little they could've done to improve aerodynamics, they didn't do.
THAT is why the Fortwo sucks. Nothing to do with US safety regulations.
(Oh, and the reason for DOT lighting regulations sucking the way they do? The DOT regs were designed to illuminate a 1950s-era unlit, non-reflective overhead street sign.)