Greg,
Cogen is definitely possible, and George has some info on it in the files on his CD. However, consider that any small diesel engine isn't burning THAT much fuel to begin with. For example, a 6/1 burns about a quart an hour when loaded pretty heavily. The engine's pretty large in size, so it loses a lot of heat by direct radiation. The cooling water won't hold a whole lot of heat, too. Most of the heat will be in the exhaust, but the problem you face with trying to capture exhaust heat is that unless the exhaust pipe stays hot, carbon will deposit and slowly begin to choke down the pipe.
A quick way to calculate is at a fuel burn rate of 1 quart/hour, that's 150,000 btu/hr in a gallon of diesel, so that's 37500 btu/hr in a quart. Mechanical efficiency might be 30% in this kind of engine, so that leaves 70% or 26250 btu/h left over, mostly as heat. But the engine's large and has a lot of hot surfaces to radiate and convect heat away, especially with the wind the flywheels whip up blowing the heat around. So you're left with maybe 20,000 btu/h that you still have to extract from the cooling water and exhaust, should you decide to attempt that.
By the time you capture the waste heat from cooling water and maybe exhaust, you might do 15,000 btu/h which is about what you'd get from a plug-in electric space heater. If you live in a cold climate you know that's not much heat. Don't wish to dissuade you from what might be an interesting project, just be mindful that there isn't very much heat available from such a small engine to capture.
One thing you could do to save energy. Pre-heat the domestic cold water line that goes into your domestic hot water heater by passing it through your engine cooling tank. Code, I believe, would prohibit that, but that is a way to make longer hot showers less expensive.
Quinn