Well, probably would be better, but you would also have to totally redesign the differential. to be a 1:1 ratio the ring and pinion would have the same number of teeth, that's not going to work (mechanically speaking) in the rear end design we have now... I don't have any idea what the amount of drag is when in overdrive, but the new 5 and 6speed transmissions are well designed and I'm sure it's minimal loss.

Best case scenario would be a constantly changing drive ratio and no gears similar in theory to the way a snowmobile drive works. Think Chrysler tried this in the 50's. Perhaps replace the transmission as we know it with a hydraulic pump and drive assembly that would have a constantly changing drive ratio based on the power demanded to accelerate to or maintain a given speed??????