Diesel engines inherently have a cooler exhaust stream due to their higher thermal efficiency. This is why turbos are so common on diesel engines: special metals/ceramics are not needed to withstand the heat. Plain ol' steel will do with diesel exhaust.

You are correct with the efficiency of the generator though. 2% is spot on with current TEC technology. Recent advances may double that to 4% while lowering the cost of TEC modules (see TechnologyReview).

The big innovation with WHER is the possibility of completely removing the accessories from the crank which allows for more significant fuel savings than 2% due to the fact that the engine only needs to worry about the load necessary for propelling the car forward. Therefore, it does not need to run while coasting or at a stop (don't need to turn the crank anymore to power the AC) and you don't need a margin of error programmed in which means that the savings will probably be between 3-6% at cruise.

Also, removing accessories from the crank allows for more creative placement of things such as water pumps and compressors.