There is a hypothetical internal combustion engine that burns hydrogen directly. I think that the other poster was talking about that. Unfortunately, it is not just inefficient, but also has a major rust problem. It also would still generate NOx.

What pollution would hydrogen/oxygen combustion produce?

NOx is formed from combustion in air, from the nitrogen that makes up much of the air. If you could feed it pure oxygen then you'd avoid that but nobody's going to want a car with an oxidiser tank onboard.