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Originally Posted by GtiGyver
My understanding is that all mechanical LSDs work this way, (gear, clutch or otherwise).
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Just double-checked the Wavetrac again and you're right.
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I guess another good analogy would be that this system *would* be more efficient if the disc from the brakes on the spinning wheel were attached to the opposite wheel somehow (lets call it magic).
In this case, the exchange of energy would be such that even if the brakes were to grab the disc solid, the wheels on both sides would then spin at the same speed. The spinning wheel would pull the other wheel to spin faster by both the action of the diff under braking AND by the action of the disc itself.
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But isn't this kind of what happens?
Once the brakes are applied to the spinning side, the diff action will start spinning the stalled side whilst still spinning the side with brakes applied.
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Man, this is so much more fun than trying to figure out why these stupid digital controls are not receiving my data packets correctly... yeah I'm at work. 
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Btw. I edited the first post a little to put less focus on the friction loss differences.