I do not envy you in your job. The US Government keeps moving the targets for emissions, etc. that the diesel engine makers have to meet. Standards may be a good thing for the environment but I often wonder about the time-tables involved.
Doesn't it stand to reason that as more diesel engines are used in vehicles their costs can be kept under control to some extent? For instance, if Toyota developed a diesel engine that could be used in the 4Runner, Sequoia and Tundra could they not spread out the costs to some extent? If they are essentially the same engine couldn't they share parts, components and R&D costs? I would imagine that certification costs would be charged to each vehicle (which can be costly).
Personally, I have no problem with a smaller gas engine replacing a larger gas or even a diesel engine. Just make sure that smaller gas engine is in a vehicle with a 7K tow rating, has 4WD and most of all will last given what I ask it to do.
We make much more than just engines, but yes, the scope of our engine division has grown immensely. The investment to develop engines to keep up with the diesel regulations is an astonishing amount with many zeros behind it. You can take advantage of quantity, but even so, when an engine goes from a single turbo to a dual turbo, with egr, with exhaust filters, with urea injection (and associated level senders, quality sensors, heaters to keep it from freezing, etc) it just all adds up. The amount of sensors approximately doubles with each new set of emissions regulations.
Toyota could develop a variant of the 4.0L V6 (using much of the existing tooling and processes) that could very easily be boosted above the levels of the 4.7L V8. You could have uprated capabilities with gas mileage improved from the V8. I have a feeling if Toyota offered a 280+hp turbo V6 with 7k+ towing capabilities, most of the people wanting a V8 would be perfectly happy.
I'll give an example of my daily driver. I drive a 2.5L 4 cylinder turbo Subaru. I get 22-26mpg, and I make over 350hp.