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I kinda enjoyed the post. I too am frustrated by many of the same shortcomings in the automotive market. I too am looking to engineer a better way.
I think you would be well advised to look first at whether you are going to face inspection problems with what ever you build. You didn't mention your state, but some states have rather strong antipolution regs which you could easily run afoul of. What good is it to produce a great car if you can't get a license. You think auto manufacturers are hard to change, just try changing regulatory bureaucrats ;-)
That said, it might be worth considering the use of the original Insight engine, without the electric portion. There is probably a way to "lock" it into gas mode. Then you could lighten the car a bit by removing the batteries. I'm just guessing on most of that, but it is worth at least cursory consideration. Perhaps someone will know what the basic gas only MPG is.
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