The reason that hit and miss engines run so cool, is that during the "miss" cycles they are pumping ambient temperature air through the cylinder, carrying off the heat. Many people build model hit and miss engines and run them without any water in the reservoir. However, if you run your engine for any period of time without the "miss" cycle being activated, chances are pretty good that the engine will be damaged. I'm not sure what the effect will be of having water present only in the reservoir but not all the way around the cylinder.