I started reading this with cynicism because lololol magic electricity from nothing, but no, if it goes down while full and up while empty it could work. And of course they can hook up a diesel engine if it doesn't properly work.
If they devise a grid tie system using a third rail to receive/transmit power, they could avoid placing a battery on the train and excess energy could be provided to the grid, which would be even more cost effective. Even if they opt out of connecting to the grid, the battery could be located at a stationary location rather than carried by the train, which should reduce the train’s permanent mass, lowering the size of the battery needed.
Industrial locomotives are ~10MW and 12kV or similar. So the entire ..err ..drive train is probably $10M? And the regen is free? But you have to step-up and -down to the battery?
Maybe a more informed reader can.. ahem... step in and inform us?
Instead of a freight train lets consider the slightly aged (god I'm old) electric train I would once have caught when I worked in London. As you say, each set of wheels can be braked independently and they're all using regenerative electric motors, so that's maybe 40 wheel sets on the train I'm thinking of. But, traction current is supplied at only a maximum of four points on that train, I'd guess only one is actually ever in use for simplicity.
So instead of "electrical havoc" it's a pretty simple local problem for the engineers designing the train.
Though I'm not sure if any others used a battery. In a simple mechanical version you just connect two carts to each other so one is pulled up while the other goes down.
As you note direct gravity devices are centuries old: water balances, gravity balances, paired boat lifts (like the Falkirk wheel), …
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