After more testing with the new sprocket there seems to be a problem. When going down a steep hill at about 10km/h (typical speed) the load impedance has to match the generator's internal impedance in order to prevent the bike from going too fast. Meaning that half the outputted power is wasted in the generator's internal resistance.
Using a smaller sprocket on the motor (causing it to generate more voltage per km/h) would reduce this problem, but cause significant drag when going at a speed greater than 20km/h even when there's no load.
As I would like the option of generating power even when not braking, the ideal solution seems to be to have a two-speed gear system to couple the generator to the wheel. And where might a two-speed gear system and accompanying motor/generator be obtained? Why from a cordless drill of course!