This is a must in multiplayer, one folder with ALL the aircraft in the Community folder or divided by categories if you want etc… Someone with skills could start this project and share it e.g. in flightsim.to, gathering already freeware external models in the net and modifying the characteristic to match the payware or freeware aircraft to be shown in online mode for the other users.
Any person or developers could add their exterior models only with a basic picture of the interior or so and they promote their product in that manner. It is really sad and bored to watch unreal generic planes like copters as a double aisle commercial aircraft or a 2 Mach aircraft as a small general plane. Please it is the time.

https://forums.flightsimulator.com/t/multiplayer-display-other-players-actual-aircraft-3d-models-and-liveries-around-you/242898

Step one would be for Asobo to fix the bug in their model matching algorithm where they do not show a generic twin prop to match a Caribou or P38... but show an airliner instead.  This would not take a lot of effort and would make multiplayer a lot more enjoyable 🙂

It is supposedly on the list of things to fix "in a patch".. with no particular ETA.

I was also perplexed when I started to use the setting to show other players - didn't utilise it at all since start up - and when I saw something like an F35 or a warbird I would go & have a look - very dissapointed to fly up close & formate on them to dicover it was a generic twin jet or one of the helicopters come up as a C152 - also a bit funny to see said generic jet doing slow rolls down a runway - just destroys the immersion