what you should do is just use a dry lubricant like graphite powder for the engine, that will keep it dry and keep friction down!! I think that it's a great idea and would love to see how it turns out!! If you do this well, you could easily step-up with a metal lathe and bore off-the-shelf engines and customize them for high-performance. After that, making your own engine from scratch wouldn't be too far of a stretch. Congratulations on your perseverance and, really, the BALLS to do something like this. It'll be a lot of work, and I know i couldn't do it!!