Flywheel storage would probably be far too large/heavy to carry a train along anything more than a short gap in OLE.
Larger stationary engines (i.e. power plants) tend to burn fuels more cleanly than locomotive diesel engines for starters, then where the infrastructure is there, electric trains are cheaper to run/maintain, are lighter, faster accelerating, quieter, etc.
As for efficiency, it's not as simple as pure efficiency of the engines. Especially for larger trains, the sheer size and weight of the drive train for pure diesels makes them impractical/inefficient, which is why many larger diesel trains like the Super Voyager are actually diesel-electric - they have a diesel engine running at a tuned torque band generating power, which is sent to electric traction motors.
AFAIK electric trains are actually considerably more efficient vs diesel trains, everything considered.
As for regenerative breaking, although I've seen companies advertising it as a positive, I doubt intermittent bursts of a few MW to the grid are very useful as power stations wouldn't have time to adjust that quickly etc - it's more like a convenient way of dumping a load of power to slow quickly rather than needing bigger brakes/resistor banks.
Higher station elevation might be useful for slowing etc, but not for efficiency - there's no free lunch.