I’m generally in favor of “as local as practical”, but I think that the FAA, FCC, CDC, EPA, and a few others are cases where “as local as practical” ends up being federal.
Right now, the law says “these airplanes are allowed to use these engines”, “these engines are allowed to use 100LL”, and “100LL has the following composition”. To be legal, you need paperwork that breaks one or more of those constraints, which is what GAMI is in the process of pursuing. To get that paperwork, they have to demonstrate functional equivalence and convince the FAA to issue a supplemental type certificate (the legal paperwork that would alter the second condition above). It’s not unreasonable for the FAA to need proof. Whether they need more proof than they have is self-evidently a point of disagreement between GAMI and their supporters (I count myself among this set) and the FAA.
Somehow cross country travel works without issue. Not sure how that is so different from a state "FAA" type agency.
I'm all for market forces - where they make sense. In aviation, oversight saves lives.
Modern car engines are generally much more reliable than cars made 40+ years ago. It's quite possible that this oversight is actually costing lives by limiting innovation.
There was a big push in the 1990s to put "modern car engines" into GA planes, mostly diesel. It ... didn't go well. Turns out these car-derived engines were a lot less reliable than the good old Lycoming IO series, and much more expensive to maintain due to higher complexity (not to mention heavier, which always is a concern with airframes). And then there was the question on how long the manufacturer would provide replacement parts...
There is a push to make car engines happen with some EU-based manufacturers, most notably Diamond Aircraft, today. We'll see how that works.
Add that to the fact that new aircraft are prohibitively expensive, and we'll see manual mixture control-based engines for decades to come.