My experience (we use lots of hydrogen in refineries) is the cost of producing H2 is the real problem.
The least cost method is steam reforming natural gas. Of course natural gas is falling in price and will likely stay low. But if you use the natural gas to make hydrogen at an added cost an loss of some of the energy, why not just use the natural gas as fuel in the first place. Natural Gas can be used to in both a combustion engine as well as a fuel cell.
I’m guessing the appeal of hydrogen is its abundance, but as you point out, you still have to process to get it.
What I’ve heard about hydrogen is that it’s quite a different proposition to push it through pipelines; I believe it had to do with corrosion or leaks or maybe something else.