TIME HAS passed Hill End by. In the 1870s this was a thriving NSW gold town with 27 pubs, five banks, two newspapers and a population of 8000. But now the crooked, bisecting streets are bare, the tin-roofed cottages hiding behind gap-toothed picket fences are mostly uninhabited. There is one pub, no banks and today’s papers won’t arrive from Bathurst till this afternoon. Just 100 people live here, making a living from tourist traffic.

Appropriate then, that this is the halfway point of our two- day sojourn in this most interesting member of Subaru’s fourth generation Outback range, the new 2.0-litre turbo-diesel 2.0D.

It’s the sort of wandering 1000km trip that people who buy Outbacks envision themselves making. After following the M4 out of Sydney, we’ve clambered up to Katoomba on the Great Western Highway, meandered southward along the Jenolan Caves Road, cut west through curiously named Duckmaloi, frigid Oberon, ancient Rockley and shambling Trunkey Creek. Then northward to Orange and eastward to our overnight stop, the last few kays on dirt in the dark dodging the occasional bit of scurrying or bouncing wildlife.

We’ve been on freeways, highways, back-country bitumen and even explored some forestry commission dirt. The weather has become steadily colder, the skies more overcast and there have been suggestions of rain. These mixed conditions are exactly what this all-wheel-drive Liberty-based wagon was designed for, ever since the original Outback pioneered the crossover wagon category back in the mid-1990s.

In this age of high fuel prices and lowering CO2 targets, the arrival of the diesel makes that proposition all the more attractive.

Subaru tips the diesel will add a useful 100 sales per month to the newly updated Outback range. Not bad considering it only comes with a six-speed manual, something dictated by the engine’s primarily European target audience. There’ll eventually be an automatic transmission option for the diesel, but it’s years, not months, away.

The engine’s horizontally-opposed design pays homage to Subaru’s heritage and is a world first, but apart from the same bore spacing it has limited technical cross-over with the company’s 2.0-litre petrol engine. Instead, the diesel engine’s symmetrical 86mm x 86mm bore and stroke contrasts with the petrol 2.0’s dramatically over-square 92mm x 75mm vitals.

And while they share all-alloy construction, the diesel has been toughened up considerably to cope with its 16:1 compression ratio, including metal matrix composite journals incorporated into the cylinder block, strengthened cylinder head and stronger pistons.

Add chain-drive DOHC and 16 valves, an IHI variable-nozzle turbocharger, a top-mounted intercooler and Nippondenso common-rail direct-injection, and the outputs are a competitive 110kW at 3600rpm and 350Nm between 1800 and 2400rpm. Official combined fuel consumption is a mere 6.4L/100km, while a closed-loop diesel particulate filter is standard.

From the driver’s seat the result – perhaps unsurprisingly – is a different yet vaguely familiar experience. The diesel still has that boxer smoothness, still spins happily and offers a more civilised and composed feel than most in-line four-cylinder diesels.

Of course, it delivers all this within the more restricted limits imposed by the compression-ignition combustion process. Our youthful engine was running out of useful revs by about 4200rpm, but you can expect that feeling of constipation to ease as kays mount up. Never expect it to be a manic revver, though.

But it doesn’t need to rev hard, considering it provides the sort of torquey punch in the mid-range a 2.5i Outback owner couldn’t even imagine. In any of the first four gears the diesel will pull from 2000rpm with enthusiasm. Below that it prefers first and second. On winding, undulating bitumen like the Jenolan Caves Road, it’s sometimes in third, mostly in fourth and occasionally fifth when a straight appears. Sixth is moon-shot, only good for motorway dawdling and theoretical fuel consumption claims.

No doubt that tall sixth helped our final fuel figure, which came out at 8.4L/100km, a result that matches the official figure for the CVT 2.5i, undercuts the manual by 0.5L/100km and the 3.6R by 2.0L/100km. Combine that with a 65-litre tank and the Outback 2.0D delivers a useful theoretical range of 770km. Not that the diesel is the only new carrot Subaru has dangled in front of potential Outback buyers. As we’ve already detailed (August, 2009), this is a bigger, more spacious car with upgraded petrol drivetrains, better fuel economy, a stiffer body, revised suspension, plentiful airbags and a five-star ANCAP rating.

While the styling is convoluted, the model line-up is straightforward, with three specification levels. The equipment line-up is basically identical (see breakout, right), but you do pay a premium for the diesel, its pricing lining it up to the dollar against the 2.5i with the new CVT auto, or $2500 more than the manual.

Day two arrives bright, blue-skied and much warmer. After breakfast we strike north-east on the route home. We stop for fuel at Rylstone and from there it’s up through Bylong and Sandy Hollow to the Golden Highway.

Disappointingly, this fast, flowing and virtually deserted backroad has now been sealed, robbing us of one last opportunity to enjoy the Outback’s progressive lift-off oversteer. Driven straighter, the Outback remains as secure as ever on gravel. That’s no surprise considering the viscous-coupled, permanent all-wheel-drive system is fundamentally unchanged apart from the mechanical LSD being replaced by an electronically controlled braking function within the (as always) sensitively tuned and switchable stability control system (VDC).

With time fleeting it’s on to the legendary Putty Road for the run back to Sin City. It’s here on the tightening off-cambers, hairpins and esses that the 2.0D is at its weakest. The diesel weighs in 62kg heavier than the petrol 2.5i and it shows. Subaru has tried to compensate by bumping up the front spring rate a couple of notches, but the diesel Outback is clumsier, less communicative and more prone to kickback through the steering.

It’s obvious this car has a big nose and leads with it, something emphasised by how much it has grown compared to its predecessor. At 4.8m-long, it’s a compact SUV in VFACTS categorisation only. Having said that, its 1551kg kerb weight remains commendably slim.

The longer wheelbase no doubt aids the excellent ride quality, as does the more rigid body and some specific local suspension tuning.Man-size seats, good noise damping and plenty of storage complete a well-thought-out interior, apart from the continued mounting of child safety seat retention hooks in the roof. And with that we’re back in Sydney, negotiating the clogged arterials at peak hour, dodging pedestrians and scooters, trying not to be rammed by buses. The Outback 2.0D’s coping without fuss, just as it has the entire trip. Time has passed, but not passed the Outback by. With the addition of the 2.0D it remains as relevant and worthy as ever.