Did I not say "Ska-rew the batteries"?
I think there should be some appropriately sized battery in the circuit, just to smooth out the dynamo's current pulses at lower RPMs, and at speeds under 25MPH. But for full acceleration and freeway cruising...direct connection...to all 4 wheels.
Additionally, you can't have the electric "regen" braking without some kind of resistance to suck up the current. The supercaps and deep cycle battery would likely provide that.
Now, it DOES give you some benefits to go with a servo drive train.
That was my point, it seems to work well on a larger scale with locomotives and mining trucks. Think of all the moving/wearing parts that would be replaced by the motors, which are pretty long-lived. As you stated, nothing is free, the currently used gear boxes also bleed-off a lot of power, especially automatic transmissions.
Friction brakes are also a total energy loss and weight penalty...plus you always have to replace them.
Servos give you exact control and internal breaking. For many applications I love them, sometimes I hate them (the internal brake can get stuck on occasion).