The way it sounds, each block will have to be heated to operating temperature so that the thermal distortions of each can be known and accommodated. This is basically making every block bespoke since each blocks thermal distortion will be different and will have to handled accordingly.
Saving gas would be great but how much would a bespoke block add to the price of a vehicle?

not surprised, 90% of engine wear takes place during warmup, the faster warmup is, the less wear and fuel use, hence why cooling systems are getting smaller, (less coolant to warm up, faster warm up, oil warmed by coolant in the oil cooler) auto A/C systems the same they all used to be around 1KG, now in the .56KG range, machining the cylinder bores with the block hot makes sense, I always laugh at my neighbors starting their cars in the AM with the engine idling for 20 minutes getting 0 MPG in cold weather who then Whine about their MPG

Woah - this is old technology! You heat up the block with water at 180°F and then install "deck plates" with the head bolts torqued to spec. Head bolts, main bearing bolts, water pump bolts, and other bolts can also slightly affect the distortion of the block. But literally, guys have been doing this for decades. Maybe not in a production facility, but certainly at hot-rod facilities. (The deck plate simulates the stiffness of a cylinder head but allow the cutter to cut the cylinder bores. Some Honda engines have an open deck, with floating cylinders, so they are free to move as necessary and cannot be improved by this method)

@RT1583 It sounds to me like the shape of the cylinder is measured when the block is heated with all of the high and low spots mapped. In production a shape that when heated and torqued becomes a circle is honed into the cylinder walls. Pretty incredible tool when you think about it. Every engine can now be blueprinted from the factory. Piston rings can be smaller , lighter. Less leaking allows oil to last longer. @Grunchy I was aware of using deck plates but I never heard of engine shops actually heating the block up before machining. Neat to hear of the tricks used by the top builders.

In my early days at the Rover company, we had chrome plated bores on the LandRover vehicle engines. They were so slippery they were hardly run-in by the time most engines would be ready for a re-bore. The only problem was the oil consumption due to it leaking past the 'as new' piston rings, which obviously did not seal properly.
Take the above chrome plating process and apply the materials knowledge we have gained over the last fifty or so years to the piston rings and perhaps they can be made with an 'as run-in' surface finish. That would make today's engines last as long without the down side of the oil consumption suffered in the past.

Lindsay Kent of Kent Engineering in Cape Town designed, patented and built a pressure testing system which some shops modified to do this, by running hot water through the block while it was being bored.

You still have pumping losses which is a much bigger problem for efficiency in a petrol engine. This is the force it takes to pull a piston down during the intake stroke when the throttle is mostly closed. It creates a partial vacuum which resists the piston movement. Diesels don't have throttles in the air flow which is partially (mostly) why they use almost no fuel at idle. I suspect pumping losses are a fact of life for petrol engines though.

This process tightens up everything, heats it up then measures the cylinder distortions.
Next step is to take everything off, let the block cool down then dynamically distort the honing tool to make an out of whack bore that becomes straight when the engine is assembled and warmed up.
What a way to make engines cost more. Far easier and cheaper to bolt on all the bits like crankshaft bearing caps and deck plates, heat the block up to running temperature then bore and hone the cylinders perfectly round.
No expensive new boring and honing tools required because that's the way shops that build high performance engines have done it for a long time.
The Fraunhofer guys need to spend a bit more time in the shops of NASCAR and NHRA teams.

Just check your tire pressure and you'll save 2x as much.

@Gregg I think your missing the point. for production you set up with 30 blocks , find the distortions and come up with a "best fit" program. Then that program can be used on the unheated / untorqued blocks. The only additional cost would be the machine tools which can be amortized over hundreds of thousands of blocks. If you can get 2-3% efficiency improvement I think that is huge.