We just got Elon Musk's PDF describing the Hyperloop, and a quick initial read shows the key factor that makes the system more likely to work: overcoming the Kantrowitz Limit. Don't feel bad if you have no idea what that is — I didn't either, but once I found out, it makes so much sense.
The analogy to explain the Kantrowitz limit Musk uses is a syringe, and it's a pretty good one:
Whenever you have a capsule or pod (I am using the words interchangeably) moving at high speed through a tube containing air, there is a minimum tube to pod area ratio below which you will choke the flow. What this means is that if the walls of the tube and the capsule are too close together, the capsule will behave like a syringe and eventually be forced to push the entire column of air in the system. Not good.
So, essentially, you want a pod inside of a tube that takes up most of the area of the tube, but doesn't have to shove all that air in front of it, like a syringe. So, you can either make a really huge tube (not practical for this — with a people-sized pod, that tube would have to be way too big) or you can go really, really fast (also not practical, since you risk turning your passengers into vomiting mush piles).
So, what Musk is proposing is really clever:
The approach that I believe would overcome the Kantrowitz limit is to mount an electric compressor fan on the nose of the pod that actively transfers high pressure air from the front to the rear of the vessel. This is like having a pump in the head of the syringe actively relieving pressure.
So, with a fan, you can have a pod that's close in diameter to the enclosing tube, but because the pod is actively pumping air from in front of it to behind it, the pod doesn't have to act like a plunger or piston to move ahead. Picture a big jerk moving through a crowded hallway by grabbing people and shoving them behind him as he moves through.
He's a rude jackass, yes, but he's cutting through that crowd much quicker than trying to shove everyone forward ahead of him.
There's lots more here, and I'll be honest, I haven't finished reading it all yet — but this innovation struck me as the clever, crucial bit that could make this actually work.