Because the Rotax is liquid cooled, and CHT never goes above 150C (usually operates between 90C to 120), and the engine block is made out of the same alloy with the same expansion rates, shock cooling isn't really a problem. Hence, better design has solved this problem hasn't it?
Of course liquid cooling is a better technical solution, but it costs weight and reliability.
If Rotax made an IO540-type engine (250-350HP depending on accessories) how much would it weigh?
Diamond had problems with the Thielert coolant systems, and they had all the existing technology and experience to draw on.
Of the energy generated by combustion, around 44% goes out of the exhaust, 8% is lost via the oil cooler, and 12% is lost directly from the cylinders to the airflow (
ref). So you have a lot of hardware just for that 12% or so.
BTW for how much does a new Lyco sell for?
Depends on how you buy it. Big variations. I don't know how much an O-200 sells for but a new IO540-C4 lists at about $60k from Lyco, but in reality you can buy them for about $40k. OTOH almost nobody buys a brand new engine; there is invariably an exchange deal going on.
IO540 I use 3 litres of aero shell sports plus4 at £23 with none used between changes, She burns 17 litres’ of Mogas an hour
Sure; you fly a much smaller aircraft. I would expect it to use less fuel.