If you want to make something that is better for a locost then what is available that is a pretty high bar these days. That said we do have different needs. Lots of horsepower per displacement is pretty useless as a primary goal for us, but it is good for advertising so that's a lot of what is available in the junk yards or donors. For us small physical size and light weight are the big primary factors. So I would expect pushrods and relatively large displacement. A typical airplane engine can be 6 liters and under 300 pounds...
Another approach would be to get something fun. So a small V8 of 2+ liters. Again pushrods for size.
I remember a Lotus designed engine for a light airplane from years ago. It had one piece cylinder and head to avoid head gaskets. That would help for boost and might be simpler. You could also use a combustion chamber in piston design with that like the Ford Kent engines. Pistons for those are easy to come by and would produce simple machining, one of the goals.
I think pollution requirements are a non starter. You could pass the tests, maybe. Those tests are to check the engine is sort of complying with the certification though. That certification is a many million dollar prospect, I would imagine.
Just for fun here's a picture of a downsized Cosworth V8 for an FSAE car. It's a small picture, sorry.
I was unaware of the Kent piston design, it simplifies things dramatically, and doing some checking it is readily available and quite simple to cast oneself if desired. The one piece cylinder/head design is part of the Corvair documents I ran across, as GM was experimenting with just such a design as part of their Modular Engine program, and is one of the pieces I am very interested in due to the elimination of head gaskets. Was unaware Lotus was working on a similar idea. I still like overhead cams, but pushrods do simplify things.
I have Californias emissions target rules, but not the full manual. The goal for me would be to hit the target, even if proper testing cannot be done. The target, just to put it out there would be to hit this result (in grams/mile):
Non-Methane Organic Gasses: 0.25
Carbon Monoxide: 3.4
Nitrogen Oxides: 0.4
Particulate Matter: 0.08
I've found a lot of tricks to address these, such as dual sparkplugs and using a three-way catalytic converter. Controlling the temperature is also important, to reduce the NOx emissions.