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it is a competior, it is also a bit better than GT5 imo, I mean GT has more cars and better tracks but Forza has more ways to customise your experience, it has better IAs, it does car damage better. As for realism I can't really tell what's better GT has a more realistic car handling but Forza 3 has better physics imo, however they are very similar, and since I don't play with the wheel I don't even see the point in making a so hard comparison.
In the end I love both I've played all GT and loved tham, expecially GT3, but in this last round I'd say Forza wins.
Still, since we're talking about simulators is quite obvious that the most recent one is normally the best.