Actually, being it's a possible diesel motor, oil burning off would be normal
I think with some time spent perfecting the basic idea, it could be a VERY efficient and powerful motor. Would have small displacement and as for the larger drum being harder to move, the combined total mass would be less that you'd see in a crank/rods/pistons on a normal engine. Sure, you may not get as much power but think of it this way. With the new emissions laws coming into effect the time of the standard v8 = big power idea is over.
Ford's starting to work on dozens of new GTDI(Gas Turbo Direct Injection) motors for future cars. One of the 3.0 Turbo motors is compared to the output on the crown vic's 4.6 and mustang's motor as well. The same motor in the same car would run a full second quicker 1/4 mile, get 4-5 mpg better economy. The motor would also be lighter and save weight on the car.