You know what I think would sell like crazy. A single cylinder just like the engines we have, but with better design, material quality and quality control.
Features I would personally want/add to a legal 50cc engine:
1. A counter-balancer driven off the bevel gear on the front of the motor, internal to the crankcase for lubrication to keep the vibrations down. This would add minimal extra weight and only slightly increase the length of the motor.
2. A disc style wet clutch basket. Being only 50cc it wouldn't need to be very big. Maybe 2 or 3 discs thick. This would then allow for an oil bath for all of the gears, increasing service life and reliability. Also, I would move the clutch arm to the right side of the motor as part of the case like many small Honda bike engines with a direct acting pushrod.
3. A coil and flywheel system like the BT80 engine to have a basic charging system for lighting.
4. A properly designed cylinder with adequate cooling fins so it could be run at higher throttle positions and rpm for long periods of time. I would also want an iron liner and utilize steel rings for longevity and serviceability reasons.
Basically a stihl ms271 port design, but with fins for open air cooling. 2800 to 13,000 rpm operating rpm range and 3.5hp and decent torque with no port work.
5. A countershaft design that allows the use of bolt-on hubs of different widths for sprocket alignment on different width tires and frames. The sprocket cover could then simply use spacers as needed to clear.
Would my ideas make it bigger in length and wifth, yes. It would probably be close in size to the previously mentioned BT80, which is just fine by me.
Cost would be the main issue. Even if they could be produced and sold for say, $600-800, it might turn a lot of people away. Personally, I would pay the money if the quality was there.
Bonus points if a small 2 speed planetary gearbox could be used internally for a high and low function.