...I see a few issues, some fixable, some less so.
First, while removing the boiler from the whole "steam plant" equation really does help the safety side of things, you have to be VERY VERY SURE that your separator removes ALL the water from your exhaust. Why? Because if you have even a tiny bit of water in your oil tank, and your heat it to 700F, it's going to boil and expand... and suddenly your low-pressure oil reservoir systems just turned into a really weak boiler full of oil that's hot enough to burst into flames. Instead of venting superheated invisible steam that can strip flesh from bones in seconds, you're going to be spurting oil around at temperatures that cause spontaneous combustion when meeting atmospheric oxygen. Not sure if that's really a step up.
Second, while oil and water don't mix, they do tend to form a really annoying to work with mayonnaise-like suspension of oil globules in water when mixed together really well. This takes a long time - or a lot of energy - to completely split apart.
Third, in addition to the previous problems with separating mayonnaise, heat dissipation will be an issue. Internal combustion engines carry a LOT of their waste heat away with exhaust, but in a closed-loop system like the one they're proposing here you need to remove the 85% of the energy you don't convert into work. Steamboats traditionally do this with a condenser that sits in the water, but if you're not near a large body of water, well... let's just say your condensing apparatus is going to be a huge, complicated, and difficult to work with because even if you don't have a high-pressure steam BOILER you're still going to have a high-pressure steam CONDENSER.
You could, of course, run the oil at a cooler temperature... but that drastically cuts back on your efficiency, because your power depends on having a lot of pressure inside the cylinder, and that pressure comes from the steam, and the pressure of the steam depends on the temperature... well, you get the idea. Basic thermodynamics.
So anyway. It's a cute idea, but unless they've got some really amazing tricks to solve the glaring technical fiddly parts I don't think it's going to get very far. I hope I'm wrong... but I don't think I am.