I think GM should drop a diesel in both the H3 and the H2. Having driven the H1 for a while, I have to say I don't mind the smell, and I like the ability to convert the truck over to SVO and get my fuel for free. I have a friend who is building a biodiesel system, and we've got the oil lined up (the places have to pay to dispose of it right now). He drives a 2003 Jetta TDI, and he's hoping to burn the bio in the winter for heating. But diesel is now $2.79 here in some places and gas is up at $3.09, so I don't see any reason why I wouldn't choose the diesel, and it gets better MPG.
I think if it came out tomorrow, it would break records. Particularly in the pickup, and if it wasn't priced sky-high. I think people are going to move to different areas of the market, but the powertrains they're looking for just aren't there. What else can you buy that's got a diesel and is going to follow the H3? Not the Liberty!