My idea would be to pre-compute physics using the cloud.
Aerodynamics and tires are complicated beasts. No one runs real aero or tire physics in real-time, they simplify and use pre-computed parameterizations stored in lookup tables and approximate math to substitute for the real physics of the real thing.
For example, F1 teams spend months of CPU time running simulations on supercomputer clusters to tune their aero alone. I'd wager no machine on earth is capable of running those simulations in real time.
So why not expand tuning and modifications in Forza to the next level?
Suppose you're now allowed to design your tires by tweaking parameters like the compound, tread depth, sidewall stiffness, tread pattern, etc? Suppose you can change the actual aerodynamics of the car instead of just installing kit pieces and tweaking downforce? Suppose you can modify the ECU tables and tweak the fuel-air mixtures at given altitudes, temperatures, fuel types?
Suppose that after you've built your design and tweaked your parameters, you can upload the car to the cloud, and have it crank out accurate physics parameterizations describing the behavior of the car?
Why do I think this works?
1. This is not latency sensitive. You upload your design, the cloud can come back seconds or minutes later and tell you how you did.
2. This is not bandwidth intensive. A few KB of design uploaded, a few MB of tables downloaded. (Pulling numbers out of my ass here.)
3. This is an easy thing to break into parallel instances so, say a thousand nodes of the cloud can be used for a fraction of a second to run all the physics simulations (IE the way google works).
4. You can continually improve the algorithms and simulation data used in the cloud.
5. You could charge fees to run the simulations, and the resultant tunes or parts could be sold by players to other players, so you could build a player driven economy.
What do you think?