Engine Braking?

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I can see that on the down stroke the compressed charge will 'give back' at least some of the energy 'stored' in the compressed charge, but minus the energy converted by the compression into heat. It seems to me that this must ultimately be what happens to the kinetic energy of the moving mass, i.e. it's converted to heat through the vector of gas compression, thus creating the engine braking effect.

You can only lose energy if something else gains energy. The only way the charge can lose heat energy is if it's temperature is greater than the surrounding cylinder walls/piston/head - otherwise the charge will gain temperature from the cooling system and give more energy back on the power stroke than you lost through compressing it!

Which would have a limitation in that even with 100% efficiency the work is actualy done not by creating a vacuum, but by the underside of the piston 'pushing' against atmospheric pressure, which has a nominal value of only 14.7psi (give or take altitude variation and crankcase fluctuations, which won't be much).

A quick fiddle with excel:

Pressure	8	psi	
	=0.055	N/mm^2	
Area	81	mm	
	=5153.0	mm^2	
Stroke	89	mm	
Force	284.30	N	
Work	25.30	J	per cylinder per 2 revolutions

Cyl	4		
Rate	3000	rpm		
Power	2530.29	Watts

So, even with an unrealistically high efficiency the work done creating at best a partial vacuum is not going to be the same as compressing in cylinder gas to pressures much greater than atmospheric...

If we were compressing a reasonable quantity of air then I'd agree. It would heat up substantially and you'd lose lots of energy to the cooling system. Compressing cold vacuum is a different story...