AFAIK, a Stirling engine is basically a heat pump, it mopved heat from the heat source to some heatsink using the expansion and ocntraction of air. If you were to run water over the heatsink, you'd probably both heat the water and increase the efficiency of the machine by giving a greater heat differential and greater heat conduction rate. S you could use the heat twice basically; one to move the engine's piston and a second time to heat water.
stirling engines are also known as hot air engines. there are different models and systems but i have one that already works with the temperature difference between room temperature and my hand temperature. Awesome. There is a german manufacturer under www.boehm-stirling.com that makes really nice stirling motors in different forms like cars, machines and so on.
