Way too simplified to account for anything in real world. Even when you ride 20mph (say on rollers), your power output at any given time is likely to deviate by more than 10 W from average.

Also, you are making a huge assumption that resistance remains the same within a five second time period. If you have a PM, the first thing you'll realize is how untrue that is. Furthermore, what you are proposing has already been accomplished by iBike, which measures everything but power. In a close-to-perfect setting (read, velodrome), it should be pretty accurate, but this is not true on the open road.

PM are nice but not necessary for success.