Well, according to the guy who invented teh modern version of the term (and the website everyone copied, riceboypage.com), it's someone who makes a slow car look liek a race car with either fake parts, improperly installed parts, or just stickers for parts they don't have. Or teh wrong badging, trying to look like a faster example of a car. THEN (and this is most important) they have the attitude that their fake race car is faster than anything else.

Customizing isn't ricing. '40s, 50's and '60s customs are not rice, even though the vast majority of mods are purely cosmetic. They aren't trying to look like race cars (ricer isn't just an indication of asian cars or asian drivers, but a spinoff of the word "racer.") So custom modern cars that aren't trying to look like race cars aren't necessarily rice, even if built from commonly riced cars.

Rice is also not a fast car that actually HAS the parts the stickers say. Basically, if it can "back up" the race look with real performance, it's not rice, even if you think it's tacky looking. Rice is, after all, about fake performance and the attitude that a slow car is actually faster than everything else.

It was indeed a racial term, made up by a Korean to put down the wannabe poseurs in the "AzYn PrYd" community. Riceboy and Ricer as terms for car enthusaists, came fom that website and his message board regulars back in the early '90s (which I was a member of), and it had it's derivations from the older "rice rockets" term given by bikers for the japanese sport bikes (which were also often racer replicas).