Replacing of wire frame models with new ones, replacing textures of various objects, and tweaking of the physics/rules of the game environment.


Visually, it's a fairly easy thing to do by replacing models and "skinning" the things to make them look a certain way.    You could replace the Halflife models of the characters to that they were nothing but barrels, puppy dogs, or bowls of cereal that went around shooting eachother.    Basic game play would remain unchanged, it would just look different when you viewed the objects that you replaced with different models.



How they tweak the game engine itself with various coding is the more impressive thing, not sure how they do it as I'm no programmer.

Halflife is one of the most supported games out there for Mod developers, visiting the Valve/Sierra sites could likely shed some light on the way that mods are made and point a person towards other reference material.

One of the earlier mods in this genre was the Half-life train set.  Using the func_train entity, they could create a controlable object that moves on a pre-determined course, just like the transit system in the game.  When the CS mod came out, they figured out how to make a steerable object that didn't require a predetermined course.  The attempts to make APC's were driveable, but didn't really enhance gameplay.

Hadn't seen the HL:rally yet, but it sounds like they are using either the modified func_train entity, or they are turning the player_start entity into a car.