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Valves and bearings are in short supply, but I'm sure that substitutes could be cobbled up for experimental use. " The Walter Mikron would be a neat option, but you'll have to develop engine mounts, cowlings, cooling, etc. A Continental or Lycoming installation can duplicate the configuration in a Piper or similar aircraft, where you're on your own with a Mikron. Harry's positive on the Jabiru engine, although he would recommend the 120 HP version for the Fly Baby. The Rotax 912 would be a very good option, although pricey.
The Light Sport Aircraft program will probably bring the prices of these engines down a bit, and, especially, good used ones should become available.
If you go with a Continental, all of your engine-installation problems have been solved...folks know what thickness of tubing is needed for an engine mount, and what's needed to cool the engine properly.
If you look at people who have converted auto engines, you'll find the engine and the propeller-speed reduction unit (PSRU) are pretty straightforward.
Slow, draggy airplanes like the Fly Baby want big, slow-turning props, and if you run engines like the Subaru, you'll need to get the prop speed down. If your goal is to have a good, reliable airplane that you can fly every weekend, go with a Continental. And bugs with powerplants often result in aircraft damage.The importer out of Canada has been working to sell the engine for a number of years, but has lost some momentum over the past few years.In general, though, the Walter Mikron is not a bad engine, but a bit pokey for 75 hp.My recommendations: If you don't have any engine mechanical experience (rebuilding your car engines, for example), go with the stock Continental engine, or at least an engine designed for small aircraft. If cost is an issue, look into the A-65s, like Drew Fidoe mentions.The best pick would be an O-200 with no starter or generator (to save weight). Despite it being rated as 65 HP, the Lycoming O-145 seems a bit anemic for Fly Babies (See Harry Fenton's to why this "65 HP engine isn't as effective as the 65 HP A-65).