Speaking on NeoGaf, Steve Lycett (s0l to his mum) has explained the reasons behind the absence of the All-Star mode in online races of Sonic and Sega All-Star racing.
“We would also have put the All-Stars in the online play,” he said, “except when we tried it out, if anyone has any lag it makes them massively unfair. On top of that they’re not all entirely deterministic, which led to a lot of out of sync problems. Rather than give you something that didn’t work well and ruin the online experience, we dropped it. ”
This was in response to some complaints that a couple of the characters are much better than the rest (Shadow, I’m looking at you) and thus online play can often be a two horse race.
“We knew you’d have situations where someone good could get out in front, said Lycett, “but this was far better than having things which glitched and ruined your game constantly online. ”
All-Star Racing doesn’t have a “blue shell”, the race leveling power-up used in Mario Kart to equal any big differences in positions, but the All-Star power-ups are functionally equivalent.