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I've studied this one quite a bit and think that there is actually quite a lot of potential with this - not necessarily with the MDI design (which I have not looked at in detail) but with the concept of air powered engines in general. There are quite a few ways that air engines can operate and the jury is still out on which one makes the most sense. Here is another one for example - http://www.freerepublic.com/focus/f-news/1636030/posts (this one was discussed as operating on biodiesel but can operate on air too. As pointed out in other posts, one still has to generate the compressed air and that isn't necessarily cheap since it almost always means electricity and high pressure compressors are not all the efficient - the bit of analysis that I've done shows that it can still be quite economical though and particularly so if there is a use for the heat that is generated during the compression process (this improves the overall efficiency enormously). One big advantage (and the reason why the electrical companies should rejoice with this is that it becomes a very viable way to level load electrical stations. The big problem now is that there is a peak in the morning when people get out of bed and fire factories up for the day and another peak later in the afternoon when people come home from work. Then the power demand drops off gradually and the electrical generators go into idle mode until the next morning when the cycle starts over again. (Thank goodness for coal powered plants as they have no problem adapting to this cycle as opposed to the nukes which really only operate at a single capacity.) What air powered cars do is help to level load i.e. each home owner could have a storage tank in their garage and a compressor that starts in the evening and gradually fills over the course of the evening in order to replenish the supply for the next day (or this of course could happen at as commercial fill station.) If other forms of compressing air become viable, the possibilities become even more interesting.

As for the cars themselves, there are some big advantages - absolutely zero pollution and very low maintenance being the main ones. Believe it or not, you can get a lot more torque out of a much smaller package so there is a substantial weight reduction. As has been pointed out, the generating stations still produce pollution but it is a lot easier to deal with it there than at a car exhaust pipe. The drawback is the limited driving range but recently they have been developing tanks in the 4,000 to 10,000 psi range and with this level of capacity, it won't be long before it will be very feasible to have air-powered cars on the road with a range of 50 to 100 miles. This still may not seem like much but it does satisfy the needs of most people for going back and forth to work or shopping. The issue of marketing around this device is an unknown of course - as is the technical viability of people having their own 'fill station' in their own garage (if that is what they choose to do as opposed to going to a commercial outlet).

Your remarks are thoughtful. If I may add some additional remarks:
1. Almost any design which is a departure from the established engineering norms will have detractors saying "it won't work."
2. Physics says that light stuff takes less energy to move than heavy stuff - so all high efficency forms of transport are going to look like plastic golf carts.
3. Air motors are easily capable of reversing to become air compressors - i.e. capable of storing energy while braking.
4. No highly efficent design will survive the Department of Transportation crash worthyness regulations, Americans with Disabilities Act requirements of use by handicapped persons and the American Trial Lawyers requirement that anyone hurt in an accident with one of these wonders get great gobs of money (of which the attorney will take 40%).
There is no way that these designs, under our current legal and regulatory framework, are going to be marketed in the US.