Why do you think there would be lag and glitches?
People positioning blocks on top of cars.
Cars lagging into the blocks newly positioned by the spectator (I'm talking of the lag where the car is actually behind or in front of where you see it is, so it may "slip" into the prop and get stuck).
Those are the ones which I'm pretty sure would definately be a problem.
As for lag, I'm thinking that rotating roads, and jumps above your head being positioned would lag big-time, I dont know about your comp, but mine only lags (graphical lag) when props are moving, with 16 people, that makes 8 spectators, 8 new roads being built I would think would lag me.
Of course a way to combat that is to only see those props once they are in place, this would certainly lead to a bit of confusion if a rival spectator put an explosive barrel right in front of you, or a random jump over the barrier of a road.
On that idea, wouldnt it be fun to delete a prop from under a racer's wheels?
All these "problems" said, Im thinking of this idea from a "real time" perspective, I have no idea what the blue engine is like or whether this is possible with it, but a turn based kinda thing may work.
Spec mode - 1 minute to build to as many checkpoints as possible.
Then
Race mode - get as far as possible in 30 seconds after 30 seconds....
Spec mode again, another minute to build a path to as many checkpoints as possible then...
Race mode - Same deal
Repeat that until you get a certain number of checkpoints, you win the race, or a certain number of rounds are completed.