Interesting that you should compare it to the Fairlies. I've got some spares, one to hand and another in the post, and was contemplating joining them nose to nose as a miniature Vale of Ffestiniog style loco. A problem may be that the cab doors on the Matchbox toy are too narrow for an O scale driver to clamber into, especially as he would have very little room to manoeuvre once inside the cab.
Plating over the side doors and opening out the rear of the cab may solve this on a four wheeled critter using a single body shell on a Kato 11-103 chassis but would look odd on a double ended loco. Creating wider side doors would involve some major surgery, not something I'd want to tackle when four doors are needed... All of which need to look vaguely like each other.
As an afterthought, does anyone work in S scale on 9mm gauge track? The Matchbox diesels might work better in 1:64 where the size of the doors may not be such an issue. This would give a track gauge of (very) roughly 22.5 inches (or 576mm) and though the train would be large by UK standards it might pass for something colonial. I'll ask the same question on NGRM online when they've completed their current engineering possession.