The first thing that comes to mind when thinking of McCain's $300 million electric engine prize is that if we're willing to sock that much money away for it already, why not just spend the $300 million as startup costs for actually doing it rather than hold it in reserve as a token prize for our next gazillionaire?
My second thought is that if we were going to pursue a program like this, we need to go full force. $300 million for an enterprise needing billions to succeed and promising tens of billions when it does is eerily reminiscent of the insulting-yet-satisfying redemption rewards you got as a kid (or last week) from Chuck E. Cheese. Sure, you spent ten dollars to get enough tickets to get a $1.50 notebook and 30-cent pen, but dammit, it was still somehow worthwhile, because it was stuff. The money you get from the government has the right proportion of input-to-reward, but it lacks the sort of bubbly uselessness that propagates the entire idea.
I think we should have more useless prizes for otherwise good ideas. An Iron Man-branded defunct Bradley Tank for inventing cold fusion? Yes! HDTVs for planes that are 25% more fuel efficient? Damn right! Successful replanning of an entire metro area to reduce gas usage, pollution, and sprawl? You, my friend, get a Family Guy DVD box set. Season 2. Just Season 2.