I'm pretty sure the intention is to improve side-on visibility... hence the reference to 36% of the fatal cycling accidents in 2008 happening at intersections. The article I linked to includes a statement from the inventor saying that the lighting system is not intended to take the place of forward or rearward facing lights.

If further R&D can run the system in conjunction with front and rear lights, all run off a dynohub, I'll be getting out my checkbook. Battery power, as Grim mentioned above, would make it a viable option as well. I also echo Grim's sentiment that this is a slicker setup than those MonkeyLectric bike lights.