My take on the demo is enthusiastically positive. The physics took a definite veer towards the sims, as initially it felt as uncertain as a PC sim to me. A big part of that was just getting used to it. It still has a decided Forza flavor, but you can't just grab it and go. You have to adjust to the new physics. But when you do, get ready for a bunch of thrill riding. The physics do have a caveat or two. For one thing, they won't make you forget Live For Speed. They're very polished and more realistic, but collisions are very Forza. Turn 10 evidently has this thing against showing cars leaning around turns. The cars flatly refuse. With traction control off, initially the cars felt surprisingly unstable, almost a Porsche-like feel. After some time under my belt I got used to it, but oddities still stick out here and there. I drove with everything off but ABS since I can't adjust brake pressure, and barely pressing the pedal locks up your wheels much too easily.
Another thing is that the tire sounds are superb, but as with Forza, they're late in complaining. With Gran Turismo, I can ride the line between traction and loss of grip almost precisely. But with Forza, the tires start complaining too late, and as such, that line is too fine a razor's edge, so I find myself taking turns cautiously. Another thing is, the cars don't seem to have consistent physics, going from understeer to oversteer almost at random. Other strange quirks: the 350Z is much too tail happy. The BMW M3 with all assists on is still a bit less manageable than the Porsce 911 with none... the hell?? While nice, the physics are a mixed bag.
Even then, control is great. I've managed to whip around turns failrly well and squeal a bit near the bumper strips as I hoped I could, and can usually beat the other cars with the least powerful car in the list. Of course they're fairly close in performance, but still. I can usually follow fairly closely to the bot cars, and it's a thrill to be able to keep my nose in their fender as I wait for an opportunity to break for the lead.
As for the bots, they're great! You can finally drive among them without fearing for your life! Having only eight cars is meh, but oh well.
The graphics are outstanding, nicely next gen. I play at 1080i, so replays are a bit flickery - they are what run at 30fps. But jaggies are faint, the backgrounds look amazingly lifelike - check out pics, Mugello looks very close. Contrast is a bit exaggerated, as Turn 10 was trying for HDR lighting and got it a bit wrong, so cars have deep dark shadows while the backgrounds look realistic. There are issues with shadows, which also seem to run at a lower framerate, but that's being picky. Car models are super. Maybe not as super as GT HD, but they're plenty next gen for me. Particle effects are minor but still look very tasty. However when viewed from the car and coming up on them, dust looks like transparent puffballs streaming from a hose. I will have to say that "hood cam" is something of a joke, as it's so far forward you might as well call it bumpercam 2. You can't even see the Ferrari's hood. WHY did they change it from earlier iterations?! GAH... They need to add an option for a roof cam, or even a driver cam you can position and set drift parameters on.
Audio is also excellent, with V-Tech rattle, Lambo growl and Ferrari whine. I have noticed that the engine sounds do tend to be like Forza 1, in which the other cars tend to overwhelm yours. I guess I'll have to tick that "Other Cars" slider down a few notches.
Collisions are very Forza, so you probably won't see utterly realistic wrecking for the most part, although they can be spectacular. I have yet to experience "sim" damage, but what disappoints me is the paint scarring. It looks... weird, like graffiti. Oh well, maybe in a patch, it can be more like Forza 1, which has superb paint damage.
For the 360 race fiends, this is a must buy, especially with the FFB Wheel, since MS, being a monopoly, insists you buy their wheel or go home to your hand controller.
I will have to say that after a week of racing, Forza 2 is making me even more hungry for a PS3 and GT HD. It seems that Polyphony still has the edge in delivering a tangible driving experience.