Well, any 2.9 liter engine in a modern car produces far more than 20 hp. GM has a base truck engine which is a 2.9 liter 4 cylinder, and it produces 185 hp. Most automotive engines of that size will be sixes.
One advantage the Model T had was the low top speed.
At 45 MPH, you weren’t hitting all that much wind resistance… the wind resistance curve goes up exponentially above that point.
My car, at a steady 55, gets nearly 37 MPG.
At a steady 40 MPH, it is getting in the low to mid 40-MPG range.
This on a car that Ford advertises as getting 20 in the city and 30 on the highway.
The engine in the T was low compression, and I’d be willing to bet that the original tolerances on the engine were such that we’d consider a modern engine with them to be scrap. They do make a neat burbling sound when they run, however.
This page seems to imply that the diametral clearance between the piston and cylinder was about .001-.002 inch. Unfortunately, I don’t know the equivalent dimensions for a modern engine and I’m too darned lazy to drill through page after page of Chevy rebuilder webpages to find them out.
But I think the primary cause of the T’s inefficiency was, just as you say, the low compression ratio (that is, low thermodynamic efficiency). A big contributor was probably poor design of intake and exhaust passages.
At high speeds, of course, the T has all the aerodynamics of a cubicle wall.