That's your zones, again. It could be possible to use a "canned" convolution method, that blends between zones - this could actually be based on the actual space on the circuit (the link is just an example of such software, this one funnily enough doesn't use convolution). But now we're talking about memory usage again, on top of some hefty CPU time.
Crackdown appears to use a combination of zoned effects and simple multi-tapped (from raytracing) convolution.
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The "problem" with using flat-response mics is that almost no-one has an audio system with a flat response. That's why I mentioned calibrating an EQ based on recorded information (e.g. using the PSEye). Not perfect, but a step in the right direction.
As far as DSP was concerned, I was really talking in general - given that all games nowadays operate in a digital environment, analogue devices are a bit of a nuisance for creating effects (in games)
And yes, I've heard the discontinuities in the ambient loops - only when mincing around and not actually racing, though. Still, it doesn't excuse it.
I get the impression that you have some insight (which I don't btw.). I just don't understand, if they can make sound effects in tunnels which don't seem to affect the CPU (even the older generation of gaming consoles could handle that), why wouldn't they be able to add similar effects like the one I suggested without reaching memory or CPU limits on the PS3? GT5 is said to push the PS3 to its limits and I don't know if GT4 pushed the PS2 to a maximum. I also noticed the "tunnel-effect" in GT5 Prologue so I would also expect it to be in GT5. Why would a similar effect be the thing that sinks the ship in GT5?
I may have missed your point.