Due to the slow speed of this engine, Guy thinks the VE is quite good. I will make an attempt at measuring it someday.
Certainly, there are a large number of factors involved in extracting maximum energy out of the fuel. A cast iron piston is a good start.
I think thermal coatings may assist in this also. Running the engine at a high temperature will help. As will things like modern low friction piston rings.
Here are some ideas if your are interested in changing the nature of the Listeroid.
1) Tuned airflow (intake and exhaust tuned runners) Low restriction filter and muffler.
2) Actual flow bench work on head
3) Increase compression ratio (probably your best gains here)
4) Reduce combustion heat losses. (important in slow speed engines)(theramal barrier coatings?)
5) Reduce piston ring drag (modern, thinnerm, TiN rings? fewer rings)
6) Reduce piston friction (DLC, diamond like carbon coatings) are a favorite now and seem to work well.
7) Camshaft tuning. There may be some advances in cam timing theory you could explore.
Valve train losses. Roller rockers have somewhat less friction. I'm considering this for other reasons.
9) Oil pump losses. Some here feel an oil pump is not necessary.
10) Oil windage. Some effort can be made to reduce oil splash to the minimum required.
11) RPM control. Lower RPM has lower frictional losses. Load dependent?
12) Reduce crankcase pressure. (the reed valve is not so good on most listeroids) Try a better reed valve.
13) Turbocharging (good turbosystems make more intake pressure than exhaust pressure, assisting efficiency)
14) Injector spray pattern and pressure. (higher pressures and better atomization result in more complete combustion)
Note: The Listeroid BSFC is very average. Some of the Changfa engines exceed and many modern diesels far exceed the Listeroid BSFC. The best numbers come from turbocharged diesels. I think there may not be much you can do within the limitations the Listeroid has. I truly think the better options would be to find a source of cheap fuel.
Like many others here, I was led to believe the Listeroids were efficient. That is truly not the case. They are not at all efficient by modern standards. The low consumption is simply a matter of low output.
For what it is worth, some modern air cooled GASOLINE fueled aircraft engines have equal or better BSFC numbers than the Listeroids. Better even than any modern automotive gasoline engines made today. The numbers are as follows. The best gasoline aircraft engines today regularly achieve 0.38 pounds fuel per HP/HR.
The Listeroids are 275 grams per KW/HR. That is more than 1/2 pound fuel per KW/HR produced at the flywheel! Or as compared to the aircraft engine example, 0.451 Lb/HP/HR. (Edited to correct stupid math mistake. I should have known the number was way off, even 2 strokes are not that bad, sorry)
Edit: 0.451 is about what current top shelf 4 stroke automotive gasoline engines achieve. Most gas engines today are about .5 pounds fuel per hour per HP. The best diesels are in the .31 range.