I like the Idea and I think it will work, but it's not likely to work as well as you might think.
I read somewhere that a modern engine is doing good if it can get 20%eff the rest is waste. about 45% is wasted heat to the cooling system and 35% wasted heat and pressure to the exhaust.
So with your idea, you effectively cut your engine displacement in half too try for the 35% wasted in the exhaust. But you are not going to be able to recover the full 35% because the steam engine is also not 100% eff. Like all heat engines the efficiency greatly depends on the initial and the final temperature of the cycle. the greater the difference the more efficient.
Say your engine exhaust temp is 900 deg f, your are able to expand the steam and exhaust until the steam almost starts to condense at 215deg f. If this is the case than your max theoretical eff would be about 50%. So you have recovered 50% of the original 35%. Well not exactly. you now have to add your real world inefficiencies like heat loss to the block, friction, blow-by, the power needed for the injectors, yada, yada.
Also a large inefficiency would come from the fact that your cylinders are not optimized for your steam cycle. For example they might be to small and not allow full expansion or too large and cause over expansion. Optimizing cylinder size might be hard because the heat available is always changing with engine load.
Sorry for sounding so negative, I do like the idea but these are just some possible design hurdles that came to mind.
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