That used to be popular many years ago, the TGA being one of the oldest designs of course, but Cyclone still have a kit of that type. One major objection is the potential illegality in all assist speed limited countries, since it's a difficult to regulate design compared to integrated chain drive units like the Panasonic. Another problem is the exposure to water spray in that position, Cyclone in particular suffering from damp and corrosion problems due to that. Chain guards are another problem, it not being easy to cover the twin chain drives.
As you say, hub motors are a simple and intrinsically neat solution to powering a bike so have tended to dominate since all the other methods were tried in earlier decades and mostly found wanting in various ways. The alternative of the sophisticated integrated chain drive systems like those from Panasonic, Yamaha and Sunstar are excellent, but of necessity expensive to produce.
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