Hi Wayne,
My spec is come from...
http://pressroom.toyota.com/presstxt...ryHybrid_s.pdf
I have no idea how is the MG1 limitations, but the redution gears are placed between MG2 and the Ring gear, so nothing is related to the MG1 and the Sun gear.
My guess is the big break through will be coming in 2008 with the third generation of Prius and replacing with the Li-ion battery.
Ken@Japan