A couple of things I would like to clarify if that is ok:
1. Typically most commercial flywheel systems spin between 15,000 and 25,000 rpm to bring the stresses down. Still an issue if there is a catastrophic failure but with known failure modes systems will shut down prior to this happening.
2. Magnetic bearings actually have more losses than mechanical. The issue is standby losses. You still have to power the mag bearing and you get internal i^2 R losses as well as potentially having to cool the units. You DO get zero friction. A mechanical bearing (which does have to get changed every 20k cycles or so) DOES have frictional losses but no i^2 R or cooling losses. If you look at the flywheel as a black box mechanical bearings are typically less "lossier" than magnetic.
Caveat here is that for some applications magnetic bearing are better. But usually as cost is a big consideration mechanical is usually the better choice.
Really appreciate the article, hope my two cents help.