What I would think is that it would be kinetic (hand) to
magnetic to kinetic (wheel) to electric energy. Gravity and inertia
are not really considered forms of energy 
Which means that an
external kinetic source is still needed.
With respect to a hand cranked dynamo, the decrease in resistance
isn't much when we upgrade to your design. This is because the axle
of rotation is still the wheel. Thus, I still do not really see the
advantage of this design. 
One possible method, which I'm working out for my FYP too, is to
design a circuit (capacitor + inductor + power electronics) to
store the gained energy into the capacitor (if you cannot make it
consistent like a normal generator).
