I think there’s an adjustment period when you start riding a trainer. It definitely feels different and takes your leg muscles a while to adapt but your factor of 3.7 is in comparison to a rider going 37kph. Climbing a hill, the speed and inertial load is much lower. Most riders don’t have a problem putting out their best power on a hill, so ultimately I don’t thing the lower inertial load on a trainer holds anyone back. Cooling is probably the biggest factor as mentioned earlier. It’s difficult to reproduce the amount of cooling one gets while riding 30+kph.
I don’t think the kickr does any dynamic simulation of inertia otherwise they wouldn’t keep making their flywheel bigger. Tacx has a simulated flywheel.