Modified Subaru engines are quite popular on homebuilts in some parts of the world, I've also seen Yamaha outboard engines, BMW motorcycle engines, etc. etc. used on a variety of homebuilts.
I don't think anybody is likely to try and stop you (even in the UK, but I would ask the relevant association what guidance they have to offer), but you'll find it a much bigger job than you expect. But...
- Nobody who has had much to do with the Rotax 912 or 914 engines would particularly recognise your rather jaundiced description of it's level of development (although no, they're not cheap).
- I would never, ever, contemplate what is in effect a new engine in a new airframe design. Have a new airframe, or a new engine, but not both - that's just asking for trouble.
- PFA have a limit on engine power that they are allowed to handle in homebuilts, worth checking what it is - I suspect around 200hp.
- Just cos it worked in a car / motorbike, don't expect it to work automatically in an aeroplane, too many things change.
- You'll need a gearbox, automotive engines rev too fast for a prop.
G