Of course you have now built a multifuel engine which is less efficient than those optimised for high grade petrol which is somewhat embarrassing if you do happen to have good fuel most of the time.
I know the Germans experimented with these Hesselman engines and they were widely used in Sweddish trucks in the 20s and 30s. Surprisingly the Germans were often short of relatively easy to synthesise diesel since so much effort had been put into making high octane aviation gasoline they had been forced to neglect diesel production. The solution was simply to mix gasoline with lubricating oil and use that as 'diesel fuel' substitute while backing of the throttle a bit to keep cylinder temperatures down.
If you were forced to use the cruder less refine Fischer-Tropsch in that era the solution would be to use a variety of engines: diesel, gasoline but mainly Hesselman Kerosene to exploit the various fractions obtained.
That might be useful for ground vehicles, but with the way Hesselman engines generally work, you'd not only need starter tanks for cold weather conditions, but for ALL starting and fuel switching during both warm-up and cool down.
The increased complexity of operation (and possibly manufacturing and maintenance) might not be worthwhile. Unless perhaps you're suggesting a more limited implementation that uses fuels only in the very near gasoline vaporization range, but not suitable for carburetor use. Still, the added fuel injection system and limitations of low compression ratios makes all that unattractive.
It seems like it'd make more sense to blend medium/low octane kerosene/oils with more volatile fuels to make them serviceable in normal gasoline engines. (that is IF you had an excessive supply of those range of fuel types) The same would apply to high octane fuels that are simply bad at vaporizing (like some heavy alcohols and aromatics) except those would also allow high compression ratios and greater efficiency. Most such fuels (light kerosene, heavy alcohols, and aromatics) are close enough to conventional gasoline needs that they'd be usable in partial blends with more volatile fuels or even used straight with more volatile fuel used only for starting.
Heavier oils and grades of kerosene with higher cetane ratings (usually lower octane as well -given detonation and diesel ignition are very similar) would be better suited used for diesel oil and fuel oil in other applications (and jet fuel). We've already had arguments on increased use of diesel in aircraft or ground vehicles before and while there's some argument for ground vehicles, there's still added complexity for diesel engines over gasoline. (including the large number of simple, small, air cooled volkwagon engines in use)
67 octane seems very high for kerosene in general, though ... figures I've seen for typical kerosene tend to me more in the 20s or low 30s. Usually good cetane numbers but horrible octane.
I think an aero engine would do well running of 67 octane kerosene. The Low Compression ratio of the Merlin would make it suitable, it would only need a fuel injection system. The Jumo 211 might work as well with fuel injection mods and lower crown piston to drop the CR from about 6:5 to 6.
That seems impractical due to the power loss and fuel efficiency losses. Low cruise power is going to have lots of drawbacks, not to mention further complicating combat ability.
That said, perhaps something conceptually similar to the Hesselman engine would be more useful if optimized specifically for high-octane fuels but able to use a variety of fuel types ranging from low to high volatility. (though in this respect, the examples of Brazil's hydrated ethanol fuel with separate starter fuel tank would be similar, though possibly less extreme) This might not be very far from existing high compression fuel-injected engines having added stater fuel implemented. (possibly not even required in warm regions)
Similar issues apply to some gas turbine engines. Aside from Heinkel's early designs requiring start/warm up on hydrogen (to get liquid fuel up to vaporization temperature), the Jumo 004 required more volatile fuel to be used for start/warmup. (I'm not sure all models required it, but I've seen starting procedures listing use of gasoline for start-up followed by transition to kerosene/J-2/diesel)
Plus there's the potential for cold vs warm weather fuel blends. Adding fractions of super volatile light organic compounds would be practical.
Methanol would also have made a good fuel. It's lean RON is 109.6 and despite its lower calorific value the higher compression ratio and density mean that the efficiency of the engine can be increased such that it's "miles per gallon is" 70% that of gasoline with the engine more powerful to boot.
If methanol had been used as a standard fuel pre-war, the designs would already include such capacity in the first place and perhaps be constructed somewhat differently than existing aircraft. That said, even at that 70%, the sheer weight penalty of that added fuel would be of serious concern. Small fractions of methanol might be acceptable in aviation fuel, but on the whole you'd want an energy density at least close to gasoline (consistently higher octane ratings allowing increased efficiency would help make up some remaining difference there too, though).
Blends of mostly butanols, propanols, acetone, MEK, along with some hydrocarbons (including aromatics from coal tar or other sources) would probably be the most attractive for aviation fuel.
Methanol itself also has significant problems with corrosion with some materials, particularly relevant here being aluminum. Plain carbon and stainless steels don't have that problem, so fuel tanks and lines that avoid aluminum would be mostly acceptable. Any engine with significant aluminum content (including carburetor components, cylinder heads and pistons) could have problems with corrosion if significant residue remained in the cylinders. (I don't think it's as much of an issue during operation, but more during stationary periods -parked or in storage) This is one of the concerns that cropped up with MW/50 systems, though the water content in there was also a concern for any rust vulnerable steel components.
Still, aside from very cold conditions, the high vapor pressure of methanol should cause residue to evaporate out of the system quickly. Ethanol is more problematic in this respect, as would water from a MW/50 system. (methanol-water mixtures would also arrest the evaporation of the methanol to some extent, so methanol reactions with aluminum would be prolonged compared to dry methanol)
Blends with some other fuels and corrosion inhibitors can help, but on the whole, those efforts would probably make more sense oriented to ground vehicle design than aircraft. (use in water injection blends would still make sense, though)
They are and it causes all sorts of problems and not just in the engines where they can have a corrosive effect but also in storage. Alcohol in fuels causes the fuels to decompose much more quickly. It's fine for relatively small amounts of specialised fuels, as in some racing cars, but poses problems when trying to supply and operate an air force (or airline).
Look up fuel phase separation and 'varnished' fuels to see some of the results.
The corrosion and hygroscopicity issues are mostly problems with methanol and ethanol, not heavier alcohols, though I already touched on that above.