If you want to buy a dynamo torch from ebay, beware: they are most likely to be fake! Just like the one I bought: there is a crank dynamo, but there is no built-in rechargeable battery, just regular batteries. The crank works, but it only powers the leds "live", it doesn't charge anything.
I had to do something with it, so I "pimped" my torch :)
Material List:
1 led
1 supercapacitor (1F, 5,5V)
Step 1Open the torch
First remove the "head" by pulling it. Be gentle, because the wires are thin and you don't want to break them by pulling the head off. Just pull it enough to separate it from the body about 1cm.
Then remove the 2 screws. Be careful when separating the 2 halves because the spring of the crank is very hard.
if you have a rechargeable battery, you charge it with the same polarity
Here's an alternate circuit you might consider... It's called a 'Full wave Bridge Rectifier'. The idea here is to improve the efficiency of the circuit. I'm assuming that the dynamo is creating an alternating current (as you've indicated by the schematic symbol - a circle with a squigly line in it). Referring to your diagram, when the upper wire goes positive, the diode conducts and the capacitor is charged a little bit. When the AC signal swings the other way, the diode does not conduct, and no charging occurs. With the Full Wave circuit, charging will occur on both the positive and negative swings of the AC signal - so you get twice the charging effect! You're not really getting something for nothing here, the additional load should increase the force you must use on the crank - but it may not be that noticable.