Yes, the original concept models showed one built into the laptop and you are correct that the mechanicals prevented that from happening.

The Yo-Yo design was tried, but it suffers from a glaring problem: it only generates power half the time (when you are pulling, not when it is rewinding), requiring twice as long to charge a laptop as a crank. A redesign with two handles worked better but required two hands to use.

The final form of the hand crank is one with a built-in clamp for a table/branch. The problem with this one is that the power consumption of the XO-1 and XO-1.5 made the ratio of "crank time" to "use time" onerously low (somewhere between 1.5:1 and 3:1, depending on laptop usage). This was so low that OLPC never put the crank into production.

With the ARM based XO-1.75, we finally have a design where the crank/use ratio will allow use with a crank.

Some deployments without access to the power grid are using solar power. Unfortunately, however, the economics of power generation mean that most off-grid schools continue to use generators. Hopefully the price of solar cells and storage batteries will drop enough in the coming years to reverse that trend.

ARM processors powerful enough the support the user experience we wanted weren't readily available (at the price point we work at) four years ago, when work started on the original XO design.

There were several errors in that news article which I would like to clear up:

• the XO-1.75 will not have an 8.9" screen, but will continue with the sunlight readable 7.5" screen designed by Mary Lou Jepsen (now at Pixel Qi) used in the XO-1 and 1.5.
• the $165 price is fiction (BOM price hasn't been finalized), but probably not very far from the truth for the non-touchscreen equipped version. Please don't forget that since we don't add any profit margin, the laptop price directly depends on the volume ordered.
• the switch to ARM was completely independent of any future support for ARM in Windows. That support was announced this week, while I've been pursuing this ARM design for three years, with active development over the last eight months. Furthermore, we are using the Marvell Armada 610, which won't be supported by Windows (if you believe M$).
• Linux has shipped, and will continue to ship, on EVERY XO produced. You can believe random commenters, or you can believe the person who signs off on every SKU produced.