Coming from GT4's bungled rally mode, the following is what I think GT5 needs to do with rally instead, in order of potential greatness:
1. point-to-point stages. If there's a Japanese WRC round, it would be too awesome if PD modelled some or all of its stages. BAM - rally mode tracks done. Somewhat interestingly, that could easily work out into 6-10 tracks that are all found in one location.
1b. Doesn't have to be all the stages from one rally. TeamStig's thought sounds good too, a selection of classic stages from around the world.
1a. RACE AGAINST THE CLOCK! Or a ghost opponent at least. Or against the clock with opponents setting off in staggered starts, 1 or 2 minutes apart.
2. If no point-to-point stages, then let's have special stages instead. No racing against the clock, no ghost cars, just a proper special stage that 2 cars can race on without ever actually having to fight for the same piece of road(save for a car being lapped).
3. GT4-like dirt/snow tracks (not the snow tracks though - they need a major rethink! more speed required!), but race against the clock and/or a ghost opponent. None of this racing 2 cars on courses that are barely wide enough for one. edit: Or even the on the really wide tracks!