Zimbler,
ICE's (internal combustion engines) are extremely inefficient!!! Yet electrolysis (splitting the bond between H & O2) would simply require harnessing the wasted energy from the ICE combustion to split hydrogen from oxygen. You could then burn the split hydrogen AND the oxygen to add to the efficiency of the ICE and the "fuel" source, water, would remain inert. And the by-product of this type of combustion is water so you theoretically could collect that water and feed it back into your system. I suspect that was perhaps a part of what Stanley Meyer invented. There are MANY MANY other inventions like this that have been bought and buried or the inventor(s) came to a questionable demise.
Also - FUEL CELLS have been around since the Apollo moon missions and they split water using a PEM (proton exchange membrane) with a cathode and anode. They create electricity (a DC current) by stripping the electron from the hydrogen. There are a lot of hybrid vehicles - check into Ballard Power (BLDP) for example.
I still insist that the SOLUTIONS (even if incremental like using petroleum ICE's to create burnable gas from water) are out there and have been bought and buried by the almighty petro companies and that is WHY we should have another "Manhattan Style" project to scour the patent databases - ALL OF THEM - and unleash humanity from the burden of needing to pay for power.
One of my favorite quotes from Tesla: "We are whirling through endless space, with an inconceivable speed, all around us everything is spinning, everything is moving, everywhere there is energy. There must be some way of availing ourselves of this energy more directly. Then, with the light obtained from the medium, with the power derived from it, with every form of energy obtained without effort, from the store forever inexhaustible, humanity will advance with giant strides."