You can send replays to the XMB and send them to a friend to watch to watch (which only can be viewed inside the game menu in GT Mode). However, they have not added the programing to where you can watch it without the game itself. They were going to make it where you could send a race replay to youtube.com, etc., but there were file size issues. The files were too large to be worth the time, so they decided to scrap that idea for now and have plans to revisit it later.
I believe the file you are transfering to the XMB for the time being is vehicle data, control logs, track selection, etc that uses the GT Mode's game viewer only. This makes a file relatively smaller and easier to transfer. I don't believe the data in the transfer contains any actual viewing data at this time, just log information. (If that makes since. It's the best way I can explain it.)
They do plan that later it will be added to where you can download replays on youtube, but not at the momment. There was an article I read about this somewhere from Polyphony and would have posted a link for you, but sorry I can find it at the momment.
VDOP
