Sounds about right, the hot tube engines I have made are quite low compression.

I run mine on Propane, you will need to design an inlet valve that shuts off the gas when the valve is closed which is not too hard to do and also regulate this down to a very low flow. The same gas supply can be teed off to heat the hot tube, the smallest Sievert burner is commonly used for this. Hot tube from stainless steel and drill it so the wall is quite thin, make provision to adjust the height of the burner as the position of the "hot" part of the tube gives your ignition timing.

We also discussed the subject on MEM

Do keep us posted with some images of your design, would also be nice to see some scans of the other original images.

Having now looked through the MEM thread again the inlet would probably be better done as a turned part that can be screwed into the "tee" shaped fitting on the side of the cylinder, you could still go with teh flat type valve as shown above or a more conventional 45deg seat.

If you are going to go with a cast flywheel then Engineer's Emporium have quite a few and it's also worth contacting Graham Corry as he may have some heavy ones in the 9-10" sizes. If you go down the pattern and casting route then Purbrite have done some casting for Me and Graham recently.

Having had a better look at the images it does not look too hard to make by fabrication with a few options depending on what methods you have available to join the bits – weld, Silver solder or screw and glue (JBWELD)

The cylinder would need to have a separate liner fitted to create the water space and this would still be an option with a cast outer and a lot easier than the cored casting shown. The liner is basically just a tube turned from cast iron with a small flange at the head end, a matching recess in the cylinder flange takes the liners flange. Holes at either end of the cylinder are a food fit on the liner OD but you undercut the middle to form the water space.

As you mentioned the gas/air inlet valve as drawn would be quite a challenge with it's gas valve seating deep inside the casting and also getting the distance between the two valves correct though without a key to the captions it's hard to tell if there is any adjustment in there.

Not sure how well the simple burner shown would work as it would need some testing to get the air/gas mix right so you don't get an orange flame, maybe rig up a Sievert for initial testing of the engine and I'd make the hot tube thinner say 7/32 or 1/4" OD with 4mm bore.