Here he is.Diesels can run on just about any refined oil. In fact, when Diesel invented and patented the engine named after him, it was done so running on peanut oil.
Hydrogen probably is the answer, but its the containment system that is the issue. In theory, each "gas station" could literally be its own refinery since the only thing you need to produce hydrogen is water. Just keep passing water through a system and keep collecting the hydrogen to pump into cars.
Containing it securely and efficiently in a car is a bigger problem, believe it or not. Hydrogen isn't something you just readily compress without keeping it cool. When it heats up, it wants to expand quickly. In order to keep it cool enough that it stays nice and compressed and efficiently stored in a containter, you need a lot of insulation and technology. Otherwise, you get a car that has to refuel every 50 miles simply becuase you can't store enough of it onboard. Also, if you car catches on fire, do you want another Hindenburg right there?
Just like batteries, unless they can figure out to make the storage into something plastic or other lightweight based material, you quickly get a skewed savings over using gasoline.
Until a new battery technology can be done safely and efficiently, the current hybrids are probably about as good as its going to get. The next thing to do is put CVTs (continuous variable transmissions) and/or diesels into everything. The CVTs are just starting to come into their own and you will start seeing them in a lot of cars and trucks real soon. The evolution into 6 and 7 speed automatics just is way too many moving parts and although more fuel efficient, not very cost efficent.
I feel like I'm on Ellen's Adventure into Energy discussing all of this. Where's Bill Nye when you need him? :shrug:

You are quite correct about hydrogen being the answer or at least the closest thing we have to a silver bullet for the energy crisis. Not only will it work to run internal combustion engines but it will power fuel cells that wll not only run electric cars but our homes as well. It is also vastly safer than gasoline. Hydrogen is easily produced and when solar power advances just a bit more it can be produced cheaply with little to no environmental impact. Once the storage problem is solved (carbon nanotubes are looking very promising as a solution) there will simply be no reason not to use it.