Hi,
Yeah, there are a bunch of problems with something like this. One is the rpm resolution, though one could use the MS-II or MSnS-E code.
Harder to solve problems include things like that you don't know when the wheels are spinning, if you are headed down a hill, into (or with) a stiff head wind, etc., etc., etc. So it really only tells you about horsepower as long as you are on the straight and level, on a perfect windless day, and don't lose traction. So it's pretty limited at best.
For example, if you wanted 1000 'gauge' HP, you could rev the engine in neutral and run the datalog through the calcs!
Because this hasn't been done yet, it seems most people would rather spend time making more horsepower than measuring a small amount of horsepower.
For my money, something like the G-Tech Pro accelerometer is a better bet for this purpose.
Lance.