I second this idea. I've always found the most effective/fun concepts and mod things are ones you can see; the ones that take place in the "physical" minecraft world, not in an inventory somewhere. Sending power around via item inertia would be awesome. I suddenly have the desire to power things with fast-moving streams of cobblestone.
But see, cobble or dirt would be cheap, sure, but it would also cause a lot of friction. Stone would be slightly better, but not much. The more items you use, the more friction they cause, a-la IC2 packet size/transmission rates.
Specialized kinetic energy holding items could be made. Heavier/smoother/more expensive things work better.
Maybe some kind of lube is needed?
Maybe some things can't handle huge amounts of kinetic energy, and it has to be siphoned off by a long line of blocks that each slow an item down a bit. Or maybe they can't go around corners above a certain velocity without exploding/emitting a fast-moving ballistic projectile.
Oh. Yes please. The applications are endless for that. What if we accelerated a player, (at full size), to high speeds and used the decelerator to slow them down without killing them? Could that be used to transmit power?
What if all of the energy was simply mechanical? Storage could be in flywheels, various tiers could hold more/go faster without having problems? What about giant multi-block flywheels for powering railgun-teir acceleration?
So many crazy ideas...