You're right, that would take a lot of engineering. Impossible things tend to be like that. Like putting a windmill on your car and expecting the "wind" you create by driving to charge your battery enough to continuously drive the car.

I posted a lot of links to recent articles on "Hydraulic Hybrids" in this thread:
Hydraulic Hybrids
A good description from an Australian company that is in the market:
Hybrid Comparisons

There are some advantages over electric hybrids like no battery replacement cost and a larger percentage of braking energy converted back to hydraulic potential as compared to electric energy. And some disadvantages, namely no real improvment in highway fuel mileage due to hydraulic system (you're basically driving a "normal" ICE vehicle on the highway, with the added weight of a hydraulic system).

Several larger companies have looked into this, Eaton, Dana, Ford, and the EPA to name a few big ones. Ford even had a system on their F-350 Tonka concept a while back. Seems like most of the efforts are to build larger delivery/garbarge trucks as these make frequent stops and could benefit most from such a hydaulic system. A smaller company, Hybra-Drive, is working on a retrofit system for a Hummer. They started by making a '68 Beetle hydraulic hybrid, so it'll be interesting if they can make a retrofit system for other light trucks and cars.

-Jim