I remember looking into this about 10 years ago when I was flying a C207 for a para club. There was someone developing a direct replacement for the IO 540 (can't remember who) which was designed to run on Jet A1. Not the waxing problems of diesel as previously posted. Huge saving on operating costs compared with Avgas equivalent. It seems to have died a death. Lack of funding?? With regard to original post I think it unlikely that one would be developed for the C208 as this is powered by a PT6 so no weight gain + higher required power so not so many commercial applications. Interesting topic and would be interested on info on current developments either on this post or by E-Mail. Diesel light twins. Way to go, as for the disadvantages I sure the chancellor would find some way of taxing it!!
regards..
STOL