Aerohead, this would be adding another power stroke. The steam exhaust stroke would consume far less energy than the expansion stroke, and the frictional losses should be less than what's added as well. You might need to run a higher rpm to get the same power output though, to offset the reduction in frequency of gasoline power strokes. But then your frictional losses have gone up also... wait a minute, this idea keeps getting worse.
I can't see this approach ever coming into mass production. The steam washes all the oil off the bores as someone already mentioned, and adds water dilution to the crankcase oil. You would end up with increased oil consumption and change intervals. I can't imagine the piston rings would like running on un-oiled cylinder bores either.
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