While it could come to that, kit cars are a rather small percentage of cars on the road. Basically they're more like classic cars that aren't normally used as daily drivers but run in parades, shows ect. But then there are those in the legislature that think we need emissions on lawn mowers.
Big problem is everybody has to drive a SUV now (I pick on them and tell them it's a tall station wagon).
For me it's more a saftey issue as half of them can barely drive a car let alone a truck.
As for a built FE, other than switching fuels I doubt it could pass without adding a $10k EFI system and another $10k in exhaust, heads, sensors ect. The EPA hasn't touched requirements for 15yrs. so this gave the auto industry time to improve performance without having to improve emissions or fuel economy. Big thing is if the ecomomy slumps like in the 70's no one will be able to afford the gas or the insurance like in the 70's. People stopped buying muscle cars and started buying Datsuns. People were selling 4yr old caddies for $500.
Now might be a good time for talking the Kirkhams or Kieth C. into getting a gas turbine engine developed with FE mounts.
Then you could run it on anything from kerosine to bacon grease. Chrysler had 50 cars running them in '65.