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Would adding options for sequential gearboxes work? As I understand at the moment, the sequential gearbox in the game is a Sequential Automatic gearbox, Paddle Shifted. Like what you would find in a Ferrari Enzo, or a Lamborghini Aventador. But would it be plausible to add the rally style gearbox? Like Ken Block's Fiesta ST, or the BMW M3 SMG?

The BMW M3 SMG (E46) would fall under the same category as the Ferrari Enzo and Lamborghini Aventador as far as transmissions are concerned. They're all sequential single-clutch manual gearboxes. Like the road cars, Ken Block's rally car uses a sequential manual transmission. However, the gears themselves are straight cut, not helical like on a normal road car. It also has a clutch pedal used for starting and stopping where the road cars' clutches are completely computer controlled, no foot pedal. So no... you're not going to see rally-style gearboxes in the game. That said, sequential single clutch (using the examples mentioned), and sequential dual-clutch (Nissan GTR, Porsche's PDK etc.) are fully-represented in the game.

You don't think it's possible to include Straight Cut gears on a road car? I know they're loud and impractical and could only really be used in hardcore barely legal track cars, but BAC managed to make the MONO street legal and that thing has straight cut gears if I'm not mistaken.

I believe the Hewland transmission in that is a paddle shifted, pneumaticly activated dogbox.

A normal car, with a fully enclosed cabin, would need several hundered kilos of noice-cancelling material to be road legal.
Just listen to a racecar, WTCC or such, when they film inside, you hear the gearbox more than the engine.

https://www.youtube.com/watch?v=UzchdzkBkzQ , start at 1.40

Possible yes, but not desirable for the reasons you just mentioned. And for it to show up in the game, there definitely has to be more than one street legal example to be considered. The time it would take to balance vs. the benefit of adding it to the game would not be worth it. As a general rule though, typically race-only technology (anti-lag, straight cut gears, drag radials etc.) will not be in the game even if they can be added and used on street cars.

Ah well, I see what you're getting at now. Was an Interesting Idea but it wouldn't really do good for Road Cars.