Great thread. I'd like to answer a few unasked questions...
First off, piston ring swept area is still the number one friction related issue facing piston engines. Simple geometry dictates that larger bore/stroke (fewer cylinder) engines have less piston ring swept area, when compared by displacement. Friction is a very large factor in overall BSFC. The lowly injected Lycoming still achieves world class BSFC numbers. Big bore, low RPM and air cooling are all factors in good efficiency.
Second, Modern 4 valve cylinder heads use tumble to create turbulence, allowing a high compression ratio. The port angle, port velocity, engine RPM and valve included angles are critical in regards to detonation resistance. This unfortunately increases the size, weight and complexity of the engines.
Third, Exhaust Gas Recirculation, as used on most modern automotive engines, dilutes the fuel/air mixture considerably, and therefore lowers combustion temperatures. With significant reduction in detonation and octane requirements.
Fourth, As mentioned above, small bore, high RPM engines are far less prone to detonation. A 250cc 4 stroke motocrosser runs 12.5 to 1 compression ratio without need for high octane fuel. At a peak of 13,500RPM, detonation is much less of a concern. 87 octane will perform just fine.
Diesels are thermally more efficient, mostly due to the very high compression ratio. BUT, diesel/jet fuel is more dense. When you look at BSFC by wt, the diesel is less superior. In fact, experimental modern gasoline and yes, even Ethanol engines can exceed a typical diesels thermal efficiency! Consider that the fuel we consume has not just volume, but weight. When it comes down to it, (other than cost) the weight is what really matters. How far can you fly with 250 pounds of fuel? Jet A is 12% heavier per gallon.
In a highly loaded, hard working engine, piston heat must go somewhere. The piston rings play a large role in heat transfer. This dictates the piston ring dimensions. It's a major reason why automotive style, 1mm compression rings are not possible on a Lycoming. The piston would rapidly overheat. Regardless of external cooling.
Therein lies the genius of a modern air cooled Lycoming, Continental, or even Pratt radial. They are lightweight, simple, thermally efficient engines with superb BSFC numbers, capable of operating on lightweight fuel, with low cooling drag requirements, while achieving acceptable reliability and lifespan.
The bottom line is that the engineers in the '30's understood what was necessary to achieve the necessary performance, payload capability, speed, range and reliability balance. Your Chevy Small block will make the HP, but it won't have the low cooling drag, or the low BSFC and light weight necessary for long range with significant payload.