@madfiddler
I think it's unfair to compare a PC game to a console game since PC gives better expansions for game quality.
Most of the racing games lately when talking about engines sounds - i see the people quickly bringing PC racing simulations - which is unfair compared to consoles limits.
I've been listening & driving cars in real life.
i've listened to many cars from V4 to V12 - Rotary - I5 - I4.
I can understand the difference between a computer processed & the different sounding point of the car from inside & out, and also understand that a certain kinds of exhausts depending on the installed parts can change how the car sounds - sounds of turbos - supercharges.
When i listened to different kinds of video games engines sounds - i always notice a wrong shifting sounds like engine lags weirdly like strange pitched noises absordly changing - others tend to make good sounds from far but also has the same issue on engine RPMs - some games tends to make excellent sound inside the car - but for a game at it's time i see Forza 4 did enough to satisfy the players on the majority of cars selection which was over 400 if i'm not mistaken
Sure newer games improved certain points on the engines sounds at different positions - but in my opinion - i see that Forza 4 dispite being distorted - but that is how it will sound to the camera when the car is too close to the mics - heck i saw them digging the mics inside a flame throwing exhaust of Ferrari F40 which can be the reason for the distortion X)
I remember a game in the PSX ( the video is for the PC version while as i see - the 2 versions are almost the same based on the engines sounds ) which got a good sounds
for it's time made by Codemasters
Skip to 0:20 secs & listen to the car when the light goes green - THAT transmission sound is awesome at it's time & when the camera is inside the car - you can hear the engine nicely ^^
Skip to 8:40 for inside car camera view