Dave,
Probably the reason is explained in this web site:
http://www.smokemup.com/tech/fuels.php
They compare the gasoline, methanol and nitromethane. Probably the information gives a good reasons why we use nitro in glow fuels. The table 1 gives the total energy that could be delivered by IC engine for each fuel. Clearly gasoline is the lowest one and probably this is a good explanation why it does not work well in small displacement IC engines. Her the numbers from table I:
Total Thermal Energy delivered in IC engine (BTU)
Gasoline 53,176
Methanol 67,545
Nitromethane 125,412
Vicente "Vince" Bortone