manovoodoo: I think you have some good ideas. I think lightweight armored mesh could definitely help in a crash.
Keep in mind that motorcycles and bicycles don't compare very well. As you've noticed, a 40mph crash on a 500 lb motorcycle results in much more rider damage than a 40mph crash on a 20 lb bicycle: there's a lot more momentum involved in a motorcycle crash.
The problem, then, becomes finding your market. Who would use lightweight armor? The high-end racing crowd may, but it would have to be very light. Commuters aren't a very big market. Downhillers and motorcyclists would need something more substantial.
Maybe get a motorcycle apparel company involved? If they're already set up for producing reinforced mesh clothing, they can probably turn out a less-armored version suitable for a bicycle without too much trouble.