Re: And yet...
I presume that the law you would need passed is "the gas laws are hereby suspended and the Carnot cycle equation will be replaced with one to be issued as a Statutory Instrument".
The capacity of the engine isn't important; to reduce friction, use fewer cylinders. If the cylinders are too small it is difficult to get thermodynamic efficiency. The optimum for a petrol engine is around 300-450cc, and for Diesels rather bigger, so a 3 cylinder 1500cc Diesel is a good starting point.
Well, we have those, and with all the turbocharger gubbins and the rest they can achieve a government rating of around 72mpg in a supermini, and a real world rating more like 60.
Hybrids are actually a bit better when you take the higher density of Diesel versus petrol into account. In real world conditions the Yaris Diesel gets 61mpg, and the hybrid gets 57 on petrol.
Now consider that my perfectly ordinary, normally aspirated small MPV gets a real 45mpg, and you can see that the benefits of all that advanced technology, hybrid or Diesel, has only reduced consumption by about 20%. And you want to reduce it by twice as much again. In a few months.
Believe me, with the amount of money spent by Toyota, Ford, BMW and Mercedes on engine efficiency, if 100mpg on either fuel was possible in a practical urban vehicle, it would have happened long ago. But the law of diminishing returns has been in action for a long time now. In fact, with all the technology in modern Diesels, an engine fault can already cost far more than the savings from any possible efficiency gains.