koala logs

I agree with all your ideas here, although some of the things you said here isn't "proper" but I can see where your thoughts are heading. To set things clearly, the closed system would also include the Earth because any forces you impart to the pedals goes to the bike as well and since the bike is in contact with the ground, the closed system would also include the Earth. Momentum is still fully conserved despite the losses, but with the losses causing some of the momentum to be transferred to the Earth which you cannot use to sustain pedal motion on the bike.

However, most of the losses are simply due to friction, from parts that rub and hysteresis like from deformation of the tires, the saddle, footwear, short pads, your muscles and the likes causing your legs to lose kinetic energy unless you keep on adding work to sustain the rpm. It doesn't come from fighting against the inertia of your legs unless due to poor or inefficient pedaling technique.