I, too, would respectfully disagree with the statement that larger engine size = lower fuel economy. At work, for example, our class 8 trucks are all prepared equally. Only difference is cab style and engine. Weights are the same, duties are the same, routes are the same, but our Freightliner with Cummins M-11 consistently delivers 6. 5-6. 9 mpg on it's routes versus our Cat C7. With the Cat, you are always on the throttle, compared to the Cummins, where you rarely are. We even switched drivers for 2 weeks thinking it was driver input, and numbers came back the same, ruling out driver input.
As far as normal sized vehicles go, I think people automatically believe smaller engines automatically give better mpg, but then again the smaller engine is also usually in a smaller vehicle. So in a way, I suppose you could then say that a vehicle with a smaller engine will provide better mpg than a bigger engine, but not necessarily in the same vehicle.
Any who... lower engine speed also doesn't automatically equal lower fuel consumption. All diesel engines have their "sweet spot" where they provide a higher level of power per volume of fuel, aka Brake Specific Fuel Consumption, (BSFC). Cummins 5. 9 is somewhere around 1900 I think. However, I get better fuel mileage at 1500. Why? Because (among other reasons) there is a larger differential between air drag vs fuel efficiency. My motor may be 10% more efficient (for example only) at 1900 vs 1500, but my aerodynamic drag may increase by 30%. So just going by the best BSFC number on a graph isn't enough. And the less aerodynamic you are, the larger percentage of drag you will incur, since drag doesn't increase equally with your speed, it ramps up substantially (on the "square").
But using my example, 1500 rpm vs 1900, wouldn't 1000 rpm be even better? Probably not, since now the engine is lugging, and calling for more fuel, and there may not be enough air/boost to efficiently burn the extra fuel that's getting called to the party.
So I agree with most of what you said, that being that mpg is a factor of efficiency, when all things are equal. Throw in EPA requirements, and it all goes out the window.
Hope I didn't make things more confusing...