The real battle imo will be decided on which game provides the best online expiriance, and heres where i see Forza series having the edge.
1: PI system: love it or hate it, the PI system is a great idea, it allows you to take pretty much take any car you like and race it competativly in more than one class.
Example: take a lotus exige, it starts out in B class, its very competative in its starting class, but you can upgrade the car to be competative in A class and S class aswell and it can still hold its own, due to the large variety of upgrades on offer, meaning you can take the car you like most and upgrade it to the class of your choise and still remain competative.
(im not saying the PI system in forza2 is 100% perfect, but its far better than what im currently seeing in GT)
2: Damage & penaltys: car damage is vital to racing online, if you wall ride or shunt other players really hard you damage your car, pratically ending your chances of a win, this is very important as this feature ensures that the majority of players try to avoid car contact or wall riding during online play, of coarse there is a small minority of players who dont drive clean or try to cause crashes, but that reality exists for all online racing games and GT5 will be no exception.
3: custom paint jobs: I cant big up enough how awesome having your own cusom paint livery is when racing online, its gives your vehicle that feeling of personality and indervidualisim, that sets your car apart from everyone elses, your vehicle becomes instantly recognizable by your friends and others your have raced with before adding to that sence of idervidualism/personality.
Sure there will be a few daft designs, but in reality most of the custom paint jobs you see online attempt to create a realistic race livery look to there designs, some are even exact copies of existing real life liverys not provided by the developers.
theres nother sweeter than taking out your custom designed "Vitafone" S class MC12 and kicking some major as, its a really great feeling seeing your awesome looking designs in replay mode after a hard days online racing.
Coarse Cutting: Atm from what i have seen theres no penaltys for coarse cutting in GT5P or GT:HD, that would stop most people from cutting corners to win races, atleast in Forza2 if you cut a corner your car slows down to a snails pace effectly ruining your chances of catching up to 1st place, so kudos to turn 10 for that.
another thing is the upgrades, in Forza2 you can take a pretty much any car and make it waaaaaaaaaay quicker that it came in stock form, GT3/GT4 really didnt give you that much to work with imo, sure you could get the engines up to some serious horsepower, but in when it came to Aerodynamics or improved body parts GT was lacking imo, the only game in the GT series that was on par with Forza2 in this area was GT1 with it Race body kits, but since then then series has imo gone backwards in regaurdes to upgrading your cars, giving you less not more.
You have some great points, I agree with all of them. Its so silly to me that Turn 10 and PD can't look around at what the other is doing. If Turn 10 would just watch a replay in GT, and PD would just race FM2 online they could learn some valuable stuff.