Having ridden 'Velolution' for some three years now I know that it works.
Obviously any design like this involves a series of compromises and has its disadvantages, but to my mind they are outweighed by its versatility.
I believe it offers something different for the rider who suffers on an upright but for whom recumbents are just to radical and sacrifice too much.

Chain run
The chain will run over a pulley at the suspension pivot point instead of the frame pivot which should reduce frame flex induced by pedaling.

Rear suspension
The combination of small wheels and sitting over the rear wheel mean that suspension would make a significant improvement to the ride when in recumbent mode.
This rear suspension would be effectively deactivated when in upright mode by the shift forward in weight, reducing the tendency for any pedaling induced, energy sapping 'bobbing', seen on suspended bikes particularly when ridden out of the saddle. As well as this, the rise and fall of the rear end with the changing of positions gives a slacker head tube angle and increased trail in recumbent mode (helping stability) whilst keeping fairly standard angles when upright.

Brakes
I would like to try discs on the next prototype as when in recumbent mode most of the stopping is done with the back wheel due to the light load on the front, so brake efficiency is very important.

Racks
Velolution was designed primarily for touring and long day rides where the ability to change position helps reduce the fatigue felt over many hours in the saddle, so this prototype will have a custom rear rack.

Seat back
The back rest would make an ideal storage space and on this prototype would be made of fibreglass attatched to an aluminium frame on which the sliders linking the seat to the back would run. This would also help protect these sliders from road grime.