"Lunarized D9" was meant to be evocative. Running a diesel engine on pure oxygen (maybe lunar) and hydrocarbons from Earth with exhaust gas recirculation to keep it from burning up might be possible. But it might be more practical to build something functionally equivalent that uses batteries or fuel cells that is more circular in operation. Studies seem to show though that it is tough for ISRU to compete with shipping in resources from the most competitive market in the solar system. The dust could be a problem, it's like really sharp because it doesn't get weathered which probably makes it bad to get in your lungs.