I think another thing that may be giving OP a bit of pause is the simple fact that 250w aint all that much power. Its around 1/3 HP which would sound positively puny except for the fact that reference is continuous human cycling power which is a pretty low bar.
Also consider that state of the art batteries are something like 10-12lbs for a usable KW-Hr. The difficulty of implementing/packaging this guy practically guarantees a low effective efficiency. Overall I think you are right that it is feasible but not practical.
I saw the other cheater device in the news and I think it is very well packaged. If you really want to hide such a device I think some sort of geared hub motor might work if they still use those spokeless wheels where you might hide the assembly. It is much more straightforward to react the torque through the bice frame of course
Only 0.01% related but the application of inertial torque to a cube with no external force. This is cool as hell and might give you a headache if you try to do a free body diagram
https://www.youtube.com/watch?v=n_6p-1J551Y
also those star wars robots use the same drive mech with offcenter mass as proposed here. This guys is particularly eloborate
https://www.youtube.com/watch?v=61P_2zvbxd8