To measure the horsepower you will need the motor to drive a load such as a generator(dynamo). By varying the loading on the generator (with lamps, resistors etc) you can measure the generator output amps/volts at different rpm to calculate (roughly) the horsepower.
This just needs a couple of analog inputs and a bit of external circuitry to provide voltage levels suitable for the Arduino.
An optical or hall sensor can be used to measure the flywheel rpm using a digital input.