#1 is a valid concern and I have already looked into this as it was a concern of mine too. At 1875 rpm I have roughly 23 horsepower (65 ft/lbs) avaliable to me. That'll set me at about 70% load (@ 65 mph) which is pretty close to ideal for most engines. The only detriment will most likely be the low rpms since peak BSFC occurs at higher rpms in most naturally aspirated engines. If I need more power I simply have to downshift.
#2 really isn't much of a concern. On all the high mileage versions of cars I've seen they always gear them lower. Examples would be the Honda VX, Honda Insight, Geo Metro XFI, and even the new Chevy models that are getting better mileage like the Malibu LTZ and Cobalt XFE.
The real benefits will have to be seen. It all depends on how the BSFC map is for the engine once I'm done with it. If it has long horizontal sections like the Metro map below I'll be in great shape. If its like the Saturn map I won't see as much benefit. Since the torque output of the engine is very flat I'm guessing its more like the Geo map. The red dot is how its geared now, the purple is after modification.
Geo 1L BSFC map
Saturn DOHC BSFC map
