Roy,
I think your analysis of the effects of a lightened flywheel are not quite correct. One would only feel the beneficial effects of the kinetic energy stored in a heavy flywheel if the engine were to free rev to an elevated rpm and then the clutch were engaged. Stored energy in the flywheel will assist the engine output for a second or two. Typically, this can only be performed from a standing start. The down side is that it is brutal on the drive train and mounting features. The second instance where there might be some benefit, is where one might want to down shift to a lower gear, for additional braking without blipping the throttle. Here, an engine turning a relatively low rpm, becomes a transient brake for a very short period of time. Again, this can be quite brutal on the drive train. In all other cases I can think of, a high inerita flywheel is a detriment to torque availability at the rear wheels.
Consider the case where the car is moving slowly, in say second gear. When one mashes the throttle, the engine will respond, but it has to accelerate all the internal engine rotating and reciprecating parts, all external loads, including the alternator/generator and water pump, the flywheel and attacted clutch, and the clutch disk and gear box input shaft to engine speed. The gear box, the drive shaft, and rear end pinion are accelerated to something less than engine speed, except when in 4th-gear. Wheels, tires, brake disks, and half shafts with joints, are accelerated to roughly 1/4 the of the transmission output rpm. What torque is left over, becomes available to accelerate the car. If one can reduce the rotational inertia of any part, partuclarly those that spin at engine rpm, more torque will be available to accelerate the car, rather than the attached components. The flywheel is probably the single biggest inertia load, from the point of view of the engine. One wants to use all available torque to accelerate the car, not the rotating and reciprecating components. Therefore, a lightened flywheel will enhance the torque available to the rear wheels under all conditions, except if one drops the clutch from an elevated rpm. Here, energy is stored, then dissipated upon engagement of the clutch.
As far as reducing the flywheel inertia too much, I think one has to get quite radical before this becomes an real issue on a twink. The inertia load contributed by the flywheel, is likely the single biggest contributor, but is not the onlyimportant contributor. The clutch assembly is also quite significant. In the end, the engine low speed torque characteristics and weight of the car will be important, as is how the car is driven. If the engine is tuned for high rpm torque, at the expense of low rpm torque, and the car is heavy, lightening the flywheel should be reconsidered. It’s the overall performance the the vehicle that is important.
I hope this helps clairify the issue.
Bill