Not sure why you think engine+battery will produce less power than battery alone?
I think the concern is situations when you have engine only, and there is no more reserve left in the battery. Those long hill climbs don't give the small ICE a break to recharge the batteries. Cars like the Volt seem to be planning an ICE that can only generate about half the output that the eMotor can create, so when you are done tapping into battery reserves you are forced to drastically limit how much power the eMotor can make. So you are cruising along OK with 160hp of eMotor power available, then suddenly you only have maybe 60hp of eMotor power available because the batteries are spent. Sure if you are going up and down small hills the ICE & regen can "fill in the gaps" as you go back down a hill, but if you have constant hill climb for longer periods you don't give the system a chance to "catch its' breath" again.
Last year my wife (who supposedly doesn't care about performance at all) was car shopping and we were trying to decide between a Mazda 5 ( 153hp ) and Toyota Highlander Hybrid ( ~268hp ). We went for a Mazda 5 test drive in the "Emerald Hills" (near San Carlos), and she had the thing floored and it was just barely able to maintain the 45mph speed limit up that hill. The thing weighed about 3400 lbs which isn't all that heavy. She ended up on insisting on the Highlander because it went over the same hills with little effort and still got better gas mileage.
http://www.edmunds.com/insideline/do/Drives/FirstDrives/articleId=106717
"Although most minivan buyers aren't concerned with performance, the Mazda 5's power-to-weight ratio is a real concern. While the 2.3-liter engine feels sprightly in the Mazda 3, even in the 2,826-pound wagon version, the 5's additional 500 pounds puts a strain on the little engine.
Around-town drivers won't have much to complain about, but snowboarders won't be making any time up mountainous roads where the 5 really slugs along."
I can recall driving up steep hills in rental cars like Geo Metro, VW golf/rabbit, Subaru Justy, etc., all of which were "pedal to the floor" not able to keep up with more powerful cars, and all had well more than 70hp available.