There were a few things that couldn't be worked out. The most important was that there was no computer to control it. How would you control sensitivity, ISO? With film of course you load your preferred speed. That was one of the biggest obstacles. As Brian stated, power management was another biggie. So the dream vanished because they were thinking in analog terms and not really digital. They were thinking about digitizing an analog camera and not making a digital camera work like an analog camera.
Accepting this as the April fool trick that it was (see the disclaimer) I too would have liked to have seen it developed but I can't help thinking that if it could be done, it would have been done by now.
I'm sure most of you have seen this but here it is again for those who haven't.