One poster touched on the diesels used in the Graf Zeppelin. These, surely are the way to go for aircraft which aren't economic with turboprops. Look at the advantages:
- No spark plugs
- Burn Jet A1
- Best specific fuel consumption of any engine turning a propeller (correct me if I'm wrong)
Junkers had them on the JU86 and the Blohm & Voss BV138 patrol flying boat used them too, and that was in the days of mechanical injection. Fit them with a modern common rail system and a FADEC, and there's potential for you. Eurocopter are looking at putting a diesel in their Colibri helicopter as well.