Yes opposed piston is an old idea. For a time they were popular for high power density applications, and high efficiency applications (awesome axial flow properties). The reason this old creation fell out of favor is that, for the high-density extreme-efficiency uses fulfilled, there was an all around better replacement: gas turbines.
Gas turbines, however, have their own host of issues which make them unsuitable for all applications. Captone's 30kW microturbine, for example, is itself small, but has a sizable host of systems to support it and deal with the high temperatures, and costs a decent fraction of a million dollars last I checked. It and it's upsized bretheren are found in buses, and the occasional exotic-- see the CMT-380: a car custom built around the sizable & demanding microturbine power plant.
Given the challenges of using gas turbines, EcoMotors opting to dust off and enhance the next best thing makes some sense. There's big opportunity to evolve this already uber efficient two stroke's airflow with modern techniques and tooling. You've pointed out a number of mechanical challenges, but these seem to me considerably more mundane than the challenges of adapting a gas turbine to an every day machine. It may be old tech, but it's considerably better than what powers nearly a billion motorized vehicles on the roads and in the fields today.
I'd say the revival is both well timed and worth pausing to examine. Please feel free to contribute alternative reasons for their having fallen out of favor; would be most interesting to collect more facts or anecdotes.