Ok guys I think I have finally found a way to run HG/SS on R4 smoothly.
Most people may know this, but, there is a new update to the unofficial firmware called Wood R4. Their new firmware was released quite recently, I think in June or so. Whilst the official R4 website's newest update (1.18) was released in 2008.
http://filetrip.net/f12065-Wood-R4-1-10.html
This is the link for Wood R4 an UNOFFICIAL firmware release.
I have just started playing HG/SS using this firmware and it's been working perfectly, so please give it a try and reply here with feedback.
On a side note, Sega All Star Racers (2010) never even worked on the official firmware update but works perfectly on Wood R4, so it's a good sign.
Hope this helped a bit. :)