Neural reconstruction models for autonomous driving simulation have made significant strides in recent years, with dynamic models becoming increasingly prevalent. However, these models are typically limited to handling in-domain objects closely following their original trajectories. We introduce a hybrid approach that combines the strengths of neural reconstruction with physics-based rendering. This method enables the virtual placement of traditional mesh-based dynamic agents at arbitrary locations, adjustments to environmental conditions, and rendering from novel camera viewpoints. Our approach significantly enhances novel view synthesis quality -- especially for road surfaces and lane markings -- while maintaining interactive frame rates through our novel training method, NeRF2GS. This technique leverages the superior generalization capabilities of NeRF-based methods and the real-time rendering speed of 3D Gaussian Splatting (3DGS). We achieve this by training a customized NeRF model on the original images with depth regularization derived from a noisy LiDAR point cloud, then using it as a teacher model for 3DGS training. This process ensures accurate depth, surface normals, and camera appearance modeling as supervision. With our block-based training parallelization, the method can handle large-scale reconstructions (greater than or equal to 100,000 square meters) and predict segmentation masks, surface normals, and depth maps. During simulation, it supports a rasterization-based rendering backend with depth-based composition and multiple camera models for real-time camera simulation, as well as a ray-traced backend for precise LiDAR simulation.