[MattInMD]

Regarding rain and engines running better, well, that's true, particularly in a normal Otto cycle engine, but less so in an Atkinson cycle like the Prius.

Basically rain = cooler weather. Air contracts when it's cooler, thus contains more oxygen, and other gas, molecules per CC of air drawn into the cylinder. With more oxygen in the cylinder you better combustion and more total gas will expand more forcefully under the heat.

The Prius has a Atkinson cycle engine, and if my understanding of them is correct their low compression ratio (compared to expansion ratio) would cause them to draw less benefit from the increased gas density.

As for MPG loss, there's probably a lot of small factors here, most of which have already been covered:

1) higher tire rolling resistance
2) lower tire traction causing some energy lost in slippage (really small)
3) higher wind resistance due to the rain drops (really small)
4) lost momentum that's transfered to the rain when the car hits them.
5) rainstorms are often windy, if there's a headwind this will increase drag.
5) Driving habit changes, although as I see it most folks drive slower in the rain, and that should help, not hurt, mpg.
6) Although cooler air adds HP, it also cools the engine faster, so the Prius must run it more often to keep it warm.

My guess is 4 and 5 are the largest effects, at least in a heavy rain.