Interesting!
So the rear cog is driving a small gear attached to the rear hub?
I could see that this might be useful in the days of 1" pitch chains, since it would make it easier to use a higher gear ratio. It would also provide more options when fine tuning the gear ratio too.

There seems like there could be trouble in keeping that rear sprocket (with gear teeth on the I.D.) properly engaged with the gear. You'd need to get rid of any slack in the chain, and maybe even take care to ensure that the chainring is mounted perfectly concentric with the BB axle?
A shame that more info isn't handy.

Steve in Peoria