@Travis:
I agree to the modding, I doubt that what you said about setting up your own race conditions will be a problem (at least in theory).

I have not followed the discussion further, just saw the initial video. But from what I understood, this is like having a terminal server session to a server which is running your application (in this case a game). There is no reason why there should not be another terminal session running a dedicated server to which people connect. (My picture: I am running GTRe in a Citrix session and somebody is running a dedicated server in a Citrix session, otherwise it is the same).

So I dont think the is necessarily a similar setup like iRacing, though it would be possible as well. But I imagine they just take regular games and offer them as a service.