There's no fundamental limit thats any different than
a gasoline engine, really, but up until now there's not been a demand
for high-RPM diesels.

Thought I had responded to this before, but cannot find it.

There IS a fundamental reason diesels do not turn as many revolutions
as a gas engine. Injecting the fuel throught most of the expansion
cycle prevents speed, but does give a constant push. You could shorten
the injection so that the end of the injection is closer to TDC, but
then it would be more of an otto cycle. If you put too much fuel at or
near TDC then you would have the same problem as an otto engine with
high compression and low octane fuel. Diesel fuel is not high octane.