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can the engine be reversed to compress the air as well? what is the storage capacity in terms of energy?
Wow, that's a great question. Looking at the design, I doubt it, or if it does, it isn't the most efficient approach for compression.

Is this for short term storage or long term storage?
The compressed air is stored until you need it, just as gasoline is stored until you need to run a gasoline ICE range extender. Compressed air isn't as efficient as batteries, but it is much cheaper to implement, and zero emissions, assuming compressor is powered by clean energy.
 

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I agree this alternative looks very promising for small cars although you lose the regen of electric you make up for it with simplicity. Carbon fiber 5000 psi 88 cu. ft. tanks are now available for $600. There are ones in development for over 10k psi. Recharge at gas stations is doable in 3 min. and even home compressors are doable but expensive $5k.

Also distribution of liquid air to gas stations to recharge their central compressed air tanks would simplify the infrastructure and cost for gas station owners.

The current Tata air car http://www.theaircar.com/acf/index.html if very light and small and would not be suitable for the American market but a scale up might be as advantageous. If they get their's off the ground we will see but overall it looks very promising to me.
 
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