I also like that flag idea, it would be pretty cool to see areas of the crowd around your national flag suddenly start cheering as you drove past them.
But it seems to me that in order to do it we'd need better crowd models, and that means either a rework of the 2D models (I'm sure it'd be possible to make them look moderately realistic) or 3D ones instead.
I've also seen games with horrible looped animations, and the key to not having that occur here is this - have it on a longer loop, or related to something happening on track. With extra sound effects, you could hear parts of the stadium shout "Oooooooh!" when there's a crash
But it seems to me that in order to do it we'd need better crowd models, and that means either a rework of the 2D models (I'm sure it'd be possible to make them look moderately realistic) or 3D ones instead.
I've also seen games with horrible looped animations, and the key to not having that occur here is this - have it on a longer loop, or related to something happening on track. With extra sound effects, you could hear parts of the stadium shout "Oooooooh!" when there's a crash