It is not a trivial problem you are trying to solve here, I'm afraid. Basically you are bumping into the scoping issue. The typeahead directive evaluates it expression (city for city in cities($viewValue) here) in the scope of the DOM element on which it is placed. The way you written your wrapper directive makes it so the expression is evaluated in the directive's scope which is isolated and doesn't "see" your controllers scope.
The are number of ways around it but probably the simplest one is to link your $compiled-ed element in the scope that is $parent of your directive scope:
var linkedInput = $compile(inputHtml)(scope.$parent);
Here is a working plunk: http://plnkr.co/edit/fLFwIKNqIRbnesMjZBGj?p=preview
The other alternative is to loose an isolated scope and "manually" take care of the 2-way data binding with the help from the $parse service.