The problem with the rotaries is a result of the technology of the time and funding.

They are inefficient because they lose compressed fuel and air as the seals pass over the holes for the spark plugs, which can be largely solved with laser ignition. They are less reliable because of the design of the apex seals, which can be solved by using a roller instead of a blade. Both of those major issues with the rotary could not be solved with the technology of the 60s-00s and the tiny budget available. There are other issues that hold back the design, but those come down to metallurgy and manufacturing processes. Mazda did a great job trying to make the rotary work and it almost killed them.

The other issue that gives then an unreliable reputation is because you can't treat them like a piston engine and people treat them like a piston engine. Hard to fault the knife for breaking when it was used as a pry bar.

if allowed time to develop

The basic problem with Wankels is that the geometry of the combustion chamber (such as it is) is constantly changing, which inevitably results in incomplete combustion compared to traditional ICEs. This leads to lowered fuel efficiency and greater emissions; the emissions problem is solved with an additional combustion chamber for the exhaust gases, but this consumes more fuel and lowers efficiency even more. It's just a fundamental problem with the technology that no amount of development could ever fix.

It still has corners that need to have a moving seal. This is a huge issue.

While I'd agree in essence, in practice I don't. They're an offshoot of capitalism. The goal of capitalism is profit, and if you can create barriers to competition, that protects your profit. IP law is something created out of capitalism as a barrier. If it isn't the government doing it, it'd be goons hired by those in power. They exist because of capitalism, not from something external to it. If the system were focused on doing good or creating utility, IP law wouldn't be required.

Free market and capitalism are mutually exclusive as in the theoretical model that is the free market, with perfectly rational actors and information, a capitalist class cannot exist, they'd quickly get competed down to size.

Unregulated markets and capitalism, now that's a lovechild, as without regulation real-world markets quickly turn into monopolistic shark-tanks instead of free markets, actors not being rational, information not being perfect and all. The role of regulation, indeed the state, is to correct for that factor and make the real-world market approximate the free market.

(This view of the world brought to you by ordoliberalism, the only sane liberal economic theory there ever was or probably will be -- because they actually managed to side with the free market, and not capitalism, as the rest of them).