I'll provide one more reason that the small engine transition has been slower in America -- emissions.
The US emissions standards have been much, much higher for a lot longer. For example, catalytic converters became mandatory in the mid 1970's. I forget when leaded gasoline went away, but it was only a few years later -- certainly by 1986 there was no leaded gasoline.
For a given displacement, in a world of theory, more power equals worse emissions.
Especially in he fairly low-tech 1970's...output plummeted with emissions controls and so forth. Truly small motors were really anemic. And safety requirements made cars much heavier...again, years before Europe and Asia began to institute serious safety. I mean, how old is EuroNCAP? 5 years?
I'd also argue that, off motorway, that Europeans drive faster than people in the US. For example, in US suburbs, there are many road where on drives at least 35-40mph. Compare that to London, where I've driven across the city at 35mph -- at 3am; and it felt like being at a racetrack! I'd say the typical commute for Americans is done at higher speeds overall -- with more start and stop, so acceleration is a bigger issue.
And, as others have mentioned, fuel has only recently gotten significatly expensive by US standards. There was simply little incentive to give up performance.
Even now, fuel's only a moderate thing.
I have a car that averages 17 mpg for the driving I do (averaged over the first 11,000 miles, or roughly 1 year that I had the car before I took it to the track recently and reset the mileage just to see how bad it was on the track
)
So 12,000 miles at 17mpg is 705 gallons a year. That works out to $2,467.50 a year at $3.50 a gallon (which is only reccently the standard).
Going to a car with a smaller engine that averaged 25mpg would reduce my annual uel spend by $800. Less than $50 a month, and I would not have the joy of 425 horsepower when I need to drop the hammer.
Even taking the number to 34mpg only saves $100/month -- and clearly at that point, it's hard to imagine one is getting a lot of performance -- I couldn't get 34mpg as an average on my 2003 MR-2, and that was a fairly light sports car.
I'm not saying Americans shouldn't push downwards on engine size now -- we should for the people who don't care. But there's a lot of momentum to overcome -- a lot of people who will say the little engines "just don't let it get out of its own way!"
Steve