yes, you'd use the rod to drive essentially a large sprocket on a gearhub. But you'd have to find a gearhub that gave you decent ratios with 1:1 drive ratio; most of the current ones expect something like 38:13 or so.
And you wouldn't technically need to mount the wheel on one side only; the drive-side seat stay could come out far enough to clear the drive shaft; or you could engineer the drive axle to come out through the dropout, and have the whole drive system outboard.
Plus now I'm thinking that the play would be no different than what pedals need to handle, and that doesn't seem to be a big problem. So maybe this would be an effective alternative for the link between driver and stoker on a tandem. Really you could just replace both their pedals, on each side, with kind of a long running board that spanned the length of the bike; you could have as many people "pedaling" as could fit along its length, either standing or sitting on a long narrow bench.
Chip C