Mistake is #2. Don't make people search for the info, give it to them without friction. "Pay" them by providing more info. Real money would be in paid data mining.
Add ability to comment on other drivers. "Idiot cut me off!!!" turns into automatic notification when any instance of the app sees that plate ("Warning: 8 reports of risky behavior for vehicle"). Include automatic marking of "seen before" ("augmented familiarity").
You've also accidentally found a very interesting side business model for Mapillary.
(except that afaik they've done considerable amount of work on actually detecting and blurring license plates, so I guess Peter would rather sink Mapillary than entering this business ;-) )
It's possible to get around it by selling a device you plug the camera into, and your device has built-in GPS. I think Russia's dashboard camera "culture" might mean the device is a much easier sell - in Russia "Monitor traffic" is a problem people already seek solutions for, while the dashboard cameras is a good enough quality video people don't have to pay for again, whereas in, e.g. USA you will have to convince people they have this problem in the first place, and to pay for the cost of the device including a good video camera and storage.
In Russia people buy dashboard cameras because there is less trust in the "system", and is consistent with the paradigm:
License plate reading, unlike, say, tapping undersea fiber, is not something you need either a government's resources or a government's ability to skirt the law to do.
Add ability to comment on other drivers. "Idiot cut me off!!!" turns into automatic notification when any instance of the app sees that plate ("Warning: 8 reports of risky behavior for vehicle"). Include automatic marking of "seen before" ("augmented familiarity").