production car to kit car?

Hey guys. I've always been into cars, whether it be building, showing, racing, etc. I've never actually done a kit car, definitely looking to do at least one someday but I'm not quite at that point yet. I do however have some other slightly less involved pipe dreams that I would love to see become a reality. Like the main one I'm stuck on at the moment and have been for quite some time: my tree hugger side really wants to build a diesel daily driver to run on waste oil (free fuel, very low emissions, etc). The problem is, I just can't get into the old 80's Benz that everyone else does. If this vehicle is going to be a daily driver, I'm going to be spending alot of time with it and want something newer (and much cooler) like say a newer benz or bmw, acura tsx, etc. The problem with that is obviously the legalities involved in swapping engines and altering emissions systems, etc. According to everything I've been told, there is simply no way to legally get a diesel engine in a newer car that wasn't originally equipped with one. So my question is, what would be required to get such a vehicle retitled/registered as a kit car?  

With what you're planning getting it titled/registered as a kitcar wouldn't work because they'll probably want to classify it as a specialty car.  

so what exactly is the difference between kit car vs specialty car as far as legalities and red tape are concerned? Im having a hard time finding good compiled sources of reliable info on the subject