So basically it's a cooling issue that requires a clean sheet engine. I know less about the sleeve valve lineage -- where did the Perseus stumble?
The Perseus didn't stumble, but was quickly overtaken by a significantly more powerful engine—the Hercules, whose cylinders were exactly the same size, but with 14 ones instead of the Perseus's 9, and thus gave 1,375 hp as soon as 1938, running on 87 octane fuel.
Producing less than 1,000 hp, the Perseus was thus doomed, and a final attempt to boost performance —the Perseus 100, whose stroke had been increased from 165 to 178 mm (from 6.5 to 7.00 inches)—yet produced a 1,200 hp engine, but still far inferior to the Hercules, despite its slightly larger diameter.
So, the Perseus gave a power that was no longer competitive from the start of the conflict, and its development was halted in 1942 before its teething troubles were fully resolved. Only 2,800 were built, while the Hercules was produced over 50,000.
But one consolation: the Perseus-100 was the "father" of the Centaurus, whose cylinders had exactly the same dimensions. The power outputs "per cylinder" of these two engines were actually similar.