I'll chime in here with my experience riding a 2019 Rad City Step-Thru. It uses the same direct drive motor as the Wagon. My City is 1 y/o and coming up on 1,000 miles. Best, most fun, $1500 I've ever spent. Lots of smiles-per-mile. I split biking time between it and a regular (non-ebike) Schwinn 21-speed hybrid style bike. I love the silent DD motor and regen function for braking. Headwinds and hills are no longer an issue.
I, too, was a bit concerned with this issue of drag from DD motors prior to buying the Rad City, but have found it to be a non-issue for my style of riding. I live in Long Beach, CA. Pretty much flat paved terrain here. The only occasional hill I have to ride over is a freeway overpass, so not really much of a sustained hill to speak of.
Yes, there is some very small amount of drag with a DD motor, but only when you are coasting. I find that I only really coast when I want to slow down or I am approaching a stop sign or stop light and want to come to a complete stop. For this, the very small amount of drag and the regen function of the DD motor work in my favor. There is no drag when peddling in PAS-1 or higher setting. Generally speaking, if I'm not peddling, then I want to slow down or come to a stop. I've become proficient at estimating my stopping distance and will stop peddling to bleed off speed. I have the brake pads set far enough apart that I can squeeze the brake handles to engage the regen function and slow down considerably without the brake pads contacting the rotors. I think this will save on brake disc pad usage considerably. I may only get .1% of battery power back via the regen, but the braking assistance is very nice.
I've found peddling on the City in PAS-1 in 4th gear at 15mph is a very comfortable cruising speed for me. I weigh about 155#. I use PAS-1 for 99% of my riding to maximize battery life and miles-per-charge. I get about 45-50 miles per charge currently. At your weight and with a load of stuff on the Wagon, I could see using PAS-2 or maybe even PAS-3 if you have a heavy load. I mounted a large wire basket on the rear carrier for loading up with groceries and whatnot and still use PAS-1. I will occasionally go to PAS-2 to start from a dead stop if I have a heavy load or the street has a mild incline.
I have found the following approximate watt usage in the various PAS settings (it varies, but this is what I've observed while riding on level terrain):
PAS-1 = 60 watts
PAS-2 = 175 watts
PAS-3 = 375 watts
PAS-4 = 550 watts
PAS-5 = 750 watts
If you ride primarily in PAS-2, I believe your miles-per-charge will drop likely by 50% or more over PAS-1 usage. Also, as the battery drains, the motor becomes less snappy or responsive when goosing the throttle to accelerate. The DD motor is not particularly snappy to begin with, but I don't need to "jack rabbit" start from a dead stop so that is not an important criteria for me. It also drains the battery faster. That snappiness may be important to others and for them a geared hub motor with a higher torque rating would probably be a better choice for them. I recall seeing a Youtube video of a side-by-side acceleration test of a Rover vs Wagon (geared hub vs DD motors). The Rover "won", but only by a quarter second or less. That is what sold me that going with a DD motor was sufficient for my needs.
As AHicks says, you can always swap to a geared hub motor if you are not happy with the performance of the DD motor.
You won't know until you pull the trigger and try it yourself. But I wholeheartedly can recommend a DD motor without hesitation if your riding conditions are anything similar to my riding conditions and style.
Good luck! - RangerDave