Currently CT only works when the blocks are off by 1 block on 1 axis (ie. their faces are parallel to each other)

It would be great if CT could be made to work even on blocks which are off by 1 block on 2 axis (ie. their faces are perpendicular to each other). This should require the RSP to inform the mod if a particular CT should apply to perpenducular blocks as it probably wouldn't always be desirable. This also means this new feature wouldn't retroactively change the look of CT texture packs.

This be a big feature but it would easily make continuity the best connected textures mod out there as none other have this.
Ik you're not exactly planning on adding such things rn but if you ever consider adding more features beyond what optifine has this'd be great

First of all, I assume you are talking specifically about method=overlay. I assume the logic of the feature works such that first, the offset block is checked for whether it applies an overlay; if not and the offset block is not considered an obscuring block, check whether the directly adjacent block applies an overlay.

I was doing method=overlay testing and optimization just recently and had exactly this idea (if the above assumptions are correct). The following screenshot shows an example.

This feature would be enabled via a boolean property in the CTM file and the default should be false. Do you have ideas for a name for this property? Property names should be short (16 characters or less; multiple words can be combined with camelCase) but informative.

You are correct.
Anyway my name ideas are:

• perpendicularOverlay
• perpendicularMatch
• matchDiagonal
• extendedMatch
• enhancedMatch

• omnidirectionalCTM
• unrestrictedMatch
• matchAllAround
• fullMatching
• doRightAngles

And many other combinations using words above in different order