I looked up the power requirements for the 2G Prius according to Wayne Brown:

15.65 kW at 70 mph
11.87 kW at 60 mph

Two cycle deactivation in the '06 HCH that has ~ 18 kW/cylinder, would appear to allow two cylinders to operate in their efficient range presuming similar power requirements. Seems likes an improvement in engine efficiency, and hopefully MPG as well.

The power curve seems to be cut up really well now, what with EV, and assist for two or four cylinders. Less clear to me (my limitations, mostly), is ICE/motor system integration limitations, and transduction losses.

Hopefully a Graham Davies type person will step forward to analyze the HCH in the same way Graham has for the Prius. And of course, a bit of on road experience will be the bottom line. Interesting times! and kudos to Honda.

Addendum: Honda has a beautiful animation up. As far as I can tell, cylinder deactivation does not occur. Instead, a mechanical switch invokes valves with different timing -- Atkinson timing, perhaps ??

R2-E2, 2G Prius.
Highway/City/Husband/Wife MPG: 56.5, as of 12/2005, 26K miles

Jac Nasser, Ford President: "We are planning to launch a hybrid version of
this car [P2000] within this year [1998]. We will also make FCEV available in
2004."