Media scare tactics have made diesels the devil these day's. At least in the UK
I've always maintained (and yes I've owned a Fiat Croma 150BHP 16V MultiJet) that diesel engines are/were designed for hight torque contant load applications at low RPM. We are talking ships, generators, trans continental (USA / Australia / China / Russia etc) trains etc.
Under these conditions they are effiecient and relatively clean except during the start-up/warm-up periods. They were never designed or meant to be "flexible and dynamic" engines. They are near cruse oil burners.
Due to the traditionally lower diesel costs (used to be joked that in some countries they can't even give it away) and improved MPG over petrol it was inevitable that diesel engines would find their way into cars.
Techinally to clean up a diesel engine for automobile use is a technically complex and expensive design and production undertaking. Any cheating that reduces the costs was bound to be "fair game" and so it did come to pass.
Fiat pulling diesel engines for automobiles is not unexpected. Other manufacturers are doing it as well. It is just too expensive to design and develop a range of clean diesel engine for automibiles. Any business person would come back to basics and this is waht we are seeing.
The RIGHT engine for the RIGHT job. Petrol for autmobiles, diesel for trucks, goods vehicles etc.
Having said this I can see a place for a small capacity "generic" diesel generator engine for all electric drive cars. Unlike the diesel electric trains that have no electrical energy stores the vehicles would have large batteries and thus power reserves. The diesel generator would only kick in when required, run at a constant speed and load till its job is done. Crucial would be the ideal mass and warm-up to get an clean burn in the shortest space of time, possibly using the vehicles battery power to pre-heat the diesel engine, etc.
Being a professional engineer (retired) I would have loved to work on a project like this.
As for diesel engines dropping out of automobile use then I'm quite pleased. I loved my Croma (my first and only ever diesel car) and have towed since before year 2000, with both petrol and the Croma. The diesel tower was a great puller but actually so is my 500X 1.4 MultiAir II. Indeed (can't remember the exact figures) the 500X develops over 2/3rds of the torque of the 1.9 MultiJet diesels at a lower RPM. This is quit staggering when you come to think about it.