The following may depend on what state you live in (& other disclaimers). But:
**1. Would the dealer be able to reach out and touch my insurance? **
They don’t have to, they could just sue you for damaging their property. Typically the test driver will file the claim with his/her own insurance company who will then pay the dealer the market value of the car (less the collision deductible). Your policy, if it has the provision, would classify the car as a “Non-Owned” (read, not owned by the insured) car and handle coverage as though it were your own. This is a fairly common provision. I don’t want to hear any more negative comments about mean old insurance companies: you’ve been paying premium for a 1982 Honda & now they have to pay for a 2005 Maibatsu Monstrosity! How cool is that (for you)?
**2. Would they eat the cost figuring (rightly) that I’m not going to buy a car from someone who just jacked my premiums? ** They didn’t jack your premiums, you did by wrecking the car. In what way is this the dealership’s fault?
3. Would they say “You broke it - You bought it,” and sell me the now destroyed car at new car prices. Yes. Sort of. If your insurance company does not cover “non-owned” cars, or if you do not carry collision on your own policy. Either the dealership will force the sale or, if they have insurance on the car as suggested by Podkayne, their insurance company will pay them for the car and hand you the subrogation bill which you can submit to your insurer or pay your self.
Please note, you don’t have to get your insurance company involved, but it’d be stupid fiscally not to. You are responsible for the accident, you need to step up. (said in a kind & gentle tone).