The concept implies that there be a radio connected RFID so that local conditions can be updated as conditions change. An interesting variation.

I wasn't thinking about that kind of connection, but it's true. At various points along the route data could be uplinked into the cars navigation system through an RFID device; like at stop lights. But along a route there might not be sufficient time at a velocity to hand-shake much information while passing over an RFID. I was thinking more that a separate broad area radio kept cars updated with area information while the RFID was used for geo-location.
The Earth has a total land surface area of 230712707483000000 in^2, so theoretically, if an RFID were put every square inch on the Earth, that would be 1100110011101001111111110000101110101100010101110011000000 in binary or 58 bits of data. An RFID can easily be programmed to transpond 58 unique bits of data. Overkill, I know. I'm just trying to show that an RFID can practically be used for geolocation on roadways. In actuality there are currently less than 6.2 million miles of roadways in the US. Assuming they are all 4 lane highways(worst case), that would mean at most 4 rows of RFID every 3 feet; that's 43,648,000,000 RFID or 101000101001100111111010000000000000 in binary, 36 unique bits of data.

Magnets in the road are enough. Some experimental systems have be using that scheme for years. RFID might help in finding where you are (and I believe there are some trasnmitters that trasnmit road and weather info). GPS can help in location finding, with RFID or data-trasnponders helping refine that.

classicat, I wonder what the range is for a magnet embedded in the roadway? Do you remember reading anything about the detection range or how it was implemented? Would off-road vehicles and commercial trucks have to extend a boom to reliably detect the magnets?

In addition to geo-location the markers could also be coded to

prevent vehicles from entering secure areas,
automatically charging your credit card for tollways,
identifying empty parking spaces in parking lots and structures,
tracking stolen vehicles,
accurately marking roadway painted lines,
provide surveyors with quick references for laying out land,
provide detailed information related to continental creep,
provide indicators for impending earthquake magnitudes and locations,
provide handicapped with similar technologies for navigating the sidewalks and crosswalks of cities,
provide emergency vehicles with precise lane clearance information for route planning to an emergency,
...

Some basic information about RFID
cost about $0.20 each
size of a grain of rice
range from 0 to 100 feet typ
range 600 feet special
range selectable by shielding
directional by shielding
temp & shock resistent
data transfer up to 2 kBytes

I don't know the details for the magnet in the road thing. I know the trials I've seen were done with sedan type card that are pretty low.

For electronic toll collecting, it is done today, with an RFID transponder fixed to the vehicle, and a reader at the on and off ramps. Yuo are billed montly for your useage of the road.