I think the argument there is that with refueling a race consisted of a series of sprint races, not a full ~300km event.
Soo… A driver can theoretically cross the finish line first, but not win the event because another car scored more points because he had more fuel remaining in this tank .
I prefer the idea that’s been previously mentioned: Allow each team a pre-determined maximum amount of fuel for race day, but make the restriction severe, and allow full development and use of energy recovery systems, e.g. KERS.
I’m no mechanic, but I think the problem there is the small size and mass of a fly wheel in a formula one car would result in minimal energy recovery.