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Instead of the lights following the shape of the body, could lights be set to keep their shape and 'blister' out of the bodywork, like the rear lights on a Ferrari 458 which has round lights facing the rear, kind of set into a cylinder along the body.

not sure how easy/hard this is to do with the current engine, but it would be cool

They do this to an extent, but also kind of not... hard to explain until you play with it

Apologies if this is possible already, the pictures and videos I've seen show lights following the shape of the car. But sort of along similar lines, could lights have an option of being set into the bodywork?

There ya go, this one has a chrome surround, but same principle