John,
hybrid fuel cells, even low temp PEM can provide higer efficiencies than IC engines, even some of the advanced diesels. Go to high temp (long way off), and the efficiency advantage is there.
Its a sulfur tolerance thing really.
When you go off full-throttle, the efficiency advantage will show up, so long as thermal integration is sufficient.
Youre right there is a lot of loss, and the difference (at full load) isnt overwhelming, but at "idle" or part load, there can be a big difference.
Electrolysis is an extremely inefficient process. We'd likely be better off charging batteries and sticking to that only, IMO. High-temp electrolysis, especially with oxygen transport membranes enhances efficiencies of hydrogen production, but nowhere near enough.
There's a lot in the pipeline. Its been 5 years off for the last 30 years, but its "closer" now...
I wouldnt discount them as fools gold yet.
JMH