Diesel race cars have been done...Clessie Cummins built a diesel-powered racer for a big race (don't rememebr which, but it may have been a Grand Prix) in the early '30's...the car did quite well, mainly due to it's not needing to make one pit stop during the entire race.

There's actually a Diesel Hot-Rod Association nowadays, although it's mainly dedicated to modified diesel pickups...there is a guy out there wiht a Dodge diesel pickup that's been modified to the point where it can outrun a stock Corvette.