A form containing a "subform" will serve you well in a case like this.
You can create a form named "Owners" that is bound to the [demographics] table in which you can add/edit the owner information (name, address, ...).
You can create a "continuous forms" form named something like "Cars_Owned_subform" that is bound to the [junction_model] table. That form will contain a combo box whose Row Source is the [lookup_model] table, displaying the [model_desc] and returning the [model_id].
Then you can add a Subform control to the "Owners" table using the Subform Wizard and it will help you link up the Subform to its parent based on [cust_id]. Then as you move from one Owner to the next their cars will automatically update in the subform, and if you add a new car in the subform it will automatically be associated with the [cust_id] of the Owner whose record is currently being displayed.
As for editing the lookup table, you could very easily create a simple form to edit the [lookup_model] table.
Edit re: question update
To have a combo box that displays the [model_desc] and returns the [model_id] you'll want to have the combo box "display" two columns where the first column has a width of zero. That is, the Format properties of the combo box should include values like...
Column Count: 2
Column Widths: 0";1.3646"
...and the Data properties should include values like...
Row Source: lookup_model
Bound Column: 1
The final result would look something like this:
The subform in Design View would simply be: