[Grishnakh]

That's an excellent point; I mentioned squirting oil before, but I overlooked that it serves another purpose in cooling the piston and the seals. Lots of modern engines now have oil squirters underneath the pistons to do this.

However, since, as you say, they have to burn oil to cool and lubricate the seals, that does make me wonder if this kind of engine wouldn't work much better with a lubricating fuel, such as diesel or kerosene (jet fuel), rather than gasoline. Kerosene is used in jet turbine engines largely because it is a lubricating fuel, so it serves the purpose of both fueling and oiling. The engine in TFA appears to be a rotary derivative, but they do say that it's designed to run on JP-8 jet fuel, not gasoline.