The old engine needs to be thrown in the trash where it belongs. There are bugs that exist as far back as FM2, either nobody knows how to fix them or any fix breaks the entire system. They need a fresh start, take as much time as needed to bring out something fresh. Considering how it took the entire team to bring these "updates" for FM7 that are barebones side features, how it took a full year for something simple like taking out loot boxes, it actually seems the team is terribly inefficient and slow, changing the UI is not something that takes a year to do, it's couple weeks work at best. Compare what they've done to FM7 in a year compared to monthly patch notes for Assetto Corsa or other sims for example, the team is just sitting there sipping tea instead of working. It's either that or the engine is so terribly dated that it doesn't allow fast iteration and prototyping. T10 has cruised on the back of productivity of their Vietnamese outsourcers for years, but when asked to do something themselves to improve the game they were caught with their pants down.
It's easy to pick on something you may know barely anything about, isn't it?
It surely didn't take the team a full year just to update the UI. And I believe the reason why some other things took so long is that, at some point in the game's lifecycle, T10 was still interested in (or told to, we don't know) bringing forth the original view of the game, that is, an ever more "horizonified" Forza Motorsport. Besides, the things that took the longest to add seem to be the ones that work the best in the game, so I'm all for them taking their time.
Another thing to consider is that T10 is not Kunos Simulazioni, nor even SMS. They're frontmen to Microsoft itself. What they do has an impact on the success of the Xbox as a whole, not just their game. Their range of what they can or can't say is thus far more limited. We all know (or, at least, should know) the reason why there's RAM trucks in the Car Pass is because of contractual obligations with FCA, but, unlike Stefano Casillo, who was upfront about Porsche's marketing intentions, T10 can't just openly say "we added the RAM Power Wagon because FCA wouldn't let us add the Giulia Quadrifoglio without adding a RAM truck" or something like that.
Furthermore, T10 is limited by Microsoft's support policy regarding the Xbox. They're forced to issue monthly patches and are allowed to break this routine only when the game has a critical bug, like last month when the Race Shop and the tuning preview didn't work properly. Assetto Corsa on the PC has far more flexibility. Even Gran Turismo Sport on the PS4 has more freedom when it comes to patching stuff, which is Sony's way of doing things. I would like Microsoft to follow suit.
Now, when it comes to the ForzaTech engine itself, it's my understanding that it does need heavy updating, even at the cost of backwards compatibility. Since the physics engine is updated in each title, I find it pointless to keep backwards compatibility with tunes. This feature is one of the biggest limiters when it comes to improving the actual physics engine, as it prevents T10 from adding four-way adjustable dampers, LSD preload, viscous coupling and a sensible assists system to it. The graphics engine needs tweaking as well, but, since we will be moving on to a next Xbox within a couple years, this is a given, and it should hopefully let the team add full day cycle as well as weather to all tracks.
IMO, the biggest flaw of the current engine is that each section of the code seems so much intertwined with each other that fixing something has a very high risk of breaking something else, an issue not exclusive to Motorsport BTW. I believe T10 knows about this problem, which is why they've been on the lookout for coders with experience in C++, as leaked in an official Microsoft product page.
Personally speaking, a new engine will not always make things any better. You move to a new engine when you want to do stuff your current engine cannot, or won't do properly. It's unofficially known that the Madness engine used by SMS still had some leftover code from the NFS Shift days; the data files are eerily similar once decrypted, and Project CARS on the PC doesn't even accept graphical tweaks without a restart, much like Shift 2 back in the day. Likewise, Kunos was forced to move on to a highly updated version of their engine for Assetto Corsa Competizione because AC, praise notwithstanding, remains stuck in a reality from the 2000s, when it was not necessary for a game to offer a realistic simulation of track conditions to be regarded as a good sim. Which is why rFactor was the sim of choice for so long, despite being as barebones and unpolished as it gets.
The truth is, I get angry with the state of Forza Motorsport (and Horizon) very often, and I'm not even a fan from "back then", just someone who really enjoys the driving in the franchise, whether it's Horizon or Motorsport. But, is the grass on the neighboring gardens that much greener? Look at the general Gran Turismo Sport thread in this very forum for example. No marketing effort on Sony's part will change the fact the game scared away people who don't want to get involved in e-sports, and the people who remained loyal to the game aren't fully satisfied with it either, not to mention the "free" content it gets in a monthly basis is stuff other games have had for years, even decades. If it wasn't enough, Project CARS, the second installment of which sold less than the first and is forcing Ian Bell to broaden the franchise's appeal in the third game, often ships with bugs far more serious than anything Forza Motorsport has ever had, from turbos not working in a car to camber exploits, improper simulation of automated clutches, cars stuck in neutral when hitting bumps, and much more. And Assetto Corsa itself is ruled with an iron fist by Casillo, who is let loose simply because his fanbase is anything but critical.
At the end of the day, most of the changes I would like to see in Forza Motorsport are to move the game into a more simulation approach, so that it presents itself as a viable alternative to PC sims and retains its superiority over Gran Turismo in terms of content, features and fun. From what I could gather in the stream, both Dan and Chris know about it, which is already a great start. Technical evolution will be a natural consequence of that, if anything because the new console and service model from Microsoft will force them to do so. The tentative FM8 is T10's move to mold Forza Motorsport to an environment where Game Pass and similar services will be the primary way of getting games, on any platform, and FM7's increasing role as a test bed will allow them to push themselves further than ever, I hope.