I believe it's freehub driven - - the hub/freehub itself is a dishless unit designed and fabricated by Millyard. Internal 'gearbox' is actually a Nexus planetary hub.

More info on the bike here: http://www.pinkbike.com/news/allen-m...rt-1-2008.html
If you google Allen Millyard, you will see a ton of his wild motorcycle creations. Guy's a mad scientist.

As far as cost, I have no doubt that the frame/shock/rear hub combo would run towrad 10 grand. That's a lot of custom machining, welding and proprietary intellectual property by a guy whose day job is nuclear engineer. I'm sure his time would not come cheap.