My understanding from the engine industry perspective (I used to do LARGE engines) is that the cost is not so much FAA certification. The FAA exists to advocate as well as regulate aviation, and a lot of local FSDO jobs will be N/A if GA continues it's gradual decline. They do not have an incentive to be obstinate and kill the golden goose.
The actual hurdle is the technical development cost for a clean-slate engine. This is very high for a modern engine design, and the potential ROE would be too low for a GA engine unless you take a VERY long term view like 30+ years. Unfortunately modern managers are only interested in next quarter's stock options, and are not likely to look further than 3 years out...they won't be around to reap the long-term benefits.
An automotive conversion offers a few advantages...the basic nuts-and-bolts level engineering and testing is already done, and you have an extensive operational history to build from. All you have to do is add a few aviation specific tweaks, and off you go. The downside is that the engine was not optimized for aviation originally, and without massive re-engineering, probably never will be as efficient as a clean-slate design.
Also your options are probably limited to a tiny handful of auto engines which just happen to have a design close enough to you need for an airplane. And if the OEM stops making the engine, the aviation demand will not be high enough to sustain production, at least at an economical cost. You could easily end up starting all over if your source auto engine becomes unavailable.