After some experimenting I found I was easily able to import custom music into Star Wars Episode I Racer.

If you browse to ...\STAR WARS Racer\data\wavs\Music you can find all of the music for the game here out in the open. Before starting I highly suggest creating a new folder called Backup and coping all of the unedited wavs to this folder.

Keep in mind if anything does break and the backup doesn't fix it you may need to reinstall the game or do a data integrity check. I'm not responsible for anything breaking.

For this guide I will show you how to replace the Main Menu theme (ConflictLoop.wav)

You will need: Audacity

1. Find the song you want and have an offline copy ready to use. It must be an audio type of some kind, mp3, ogg, flac, wav, etc.

2. Copy the file to your desktop and then open it in Audacity.

3. Go to Effects > Change Speed and set the Percent Change to 100 then select okay.

4. Go File > Export Audio and set the filetype as WAV. Be sure to name it the track in question (ConflictLoop). Then hit save.

5. On your desktop there should now be the fixed ConflictLoop.wav. Drag this into your STAR WARS Racer\data\wavs\Music folder and hit replace.

6. Open up Star Wars Episode I Racer and see if the changes have been made.

The few files I have tested have worked near perfectly. However some tracks may feel too soft. This can be fixed by simply amplifying the audio either in game or amplifying the custom files directly in Audiacity.

Can this be applied to all the other music tracks or just the main menu?

All other tracks.
Every single track in the game is in the wavs folder from what I can tell.

Is there a way to replace the top-end engine sound effect? It's different from the n64 version and very annoying, because it sounds like it is constantly revving up on repeat. The sound effect seems to kick in at around 430; if it goes below that then it transitions to a much more pleasing sound, but that rarely happens since this is an arcade racing game.

There should be. If you can find which sound effect the file belongs to in STAR WARS Racer\data\wavs you can just replace it with something else.