In GT4 there where a couple of really tight narrow tracks where you battles 1 vs 1 with AI and had penalties if you hit him, is there a mode similar to this in GT5 or any way to replicate it?
The closest things that there are in this game are:
-1 Make Race in practice mode. This allows you to drive against the AI. All of the vehicles will be the same make and model that you are driving. The downside? There is no way to choose how many AI you drive against. You'll drive against a full pack of them. Additionally, unless you are in a stock (not upgraded) car, you will win easily. The AI drives stock versions of the car that you're in no matter what you're driving.
-Special Events. Some of these, like the Rally ones, have you driving against a small number of of AI opponents. The downside? You can't choose your car or track. You also race your sections separately from your opponents. You'll see them, but they are ghost cars and you're not really trying to pass them, you're trying to beat the time that they are setting. They start before you do.
That's as close as it gets in GT5. You'd think that Arcade Mode would have more options that would allow this. All you can adjust is the AI difficulty. You can't set the amount of opponents or the types of cars to race against. It's very limited.
I'm so glad that they wasted time adding NASCAR to this game and not spending it adding worthwhile stuff.