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Team Losi, advertising their Hydra-Drive system that they debuted at the 1991 IFMAR Off-Road World Championships and subsequently released to the public in 1992. The Hydra-Drive used one of three different weight oils inside an internally fluted molded plastic housing attached to the transmissions output shaft with a vaned and cross drilled impeller attached to the spur gear. Operating as a vicious coupling when the vehicle encountered rough areas of a race track the Hydra-Drive would absorb the differences in speed between the driveline and the motor, allowing the motor to maintain its RPM and thus vehicle speed as the motor was not bogged down by the slipper clutch, which on a Hydra-Drive equipped transmission, could be set much more loosely.

Often mistaken for at torque converter the Hydra-drive lacks the directionally shaped vanes contained within a converter that are necessary for those units to convert fluid flow into torque multiplication. Instead, it works exactly like the viscous center differential in an AWD vehicle, allowing for differences in input and output shaft speeds:

How different is it to drive with a hydra drive vs a normal slipper? Is this something that would only be a benefit on a rough low traction track?

I would say night and day different. The rougher the track the more beneficial but, even on a carpet track i'd argue a Hydra-Drive could be of value.

For me it served two main purposes. First, I went through a LOT less clutches. Stopping that was my primary goal, and I don't think was ever advertised as a benefit. But it struck me, and proved to be true, the more the Hydra-Drive absorbed the less the clutch would, making the clutch last longer. Second, I really liked how much better the truck drove. I prefer a stiff suspension setup. Rough tracks with big jumps (typical 90's stuff) a stiff setup eliminated chassis slap, but was slower throughout the majority of the track (and killed clutches) as you fought for traction over the rough stuff and ended up bouncing around a lot (as one would expect). With the Hydra-Drive the truck danced across the rough stuff. Carried a lot more speed. It was really noticeable. Sure, I could have softened the suspension and traded a little chassis slap for more speed throughout the track, but I got to buy an awesome speed part that let me run the setup I wanted, faster. And wasn't that the point of all the speed parts?!

They also took a bit of strain off the gears in the transmission as the hydradrive smooths out power delivery and the shocks when wheels are traveling on rough ground or landing jumps on power (or on braking). I'd just advise against using one with low turn modified motors as excessive power can melt them.

The hydradrive looks really cool, but that's a lot of additional rotating mass that gets added to that top shaft and a lot of additional stuff that could have imbalance. It's definitely got a Frankenstein-level cool factor about it though. It makes sense that it came from the 5 link rear suspension people.

What parts in the hydra drive tends to fail when using higher power motors?

oil gets too hot and it melts the impeller. But generally the LRM transmission will probably grenade itself if you start going into the single digit turn motors.