Rotaries are great, it is not uncommon for them too be used in light aircraft, both from RX7 and more recently RX8 doners. Most recently I think I heard of a T51 with one installed.
The primary advantages are, of course, much improved power to weight, far fewer moving parts, and excellent failure modes (very "limpable") if it comes to that, and because no reciprocating pistons they give super smooth running.
They do run at high RPM which necessitates a reduction unit - of course in light recreational aircraft we are used to this by now, but those who have spent hours behind chugging lycosaurs are hesitant about these new fangled gearbox thingees ;-)
The tales about needing regular rebuilds, are really more based on experiences with hoodlums caning around in turbo'd RX7s at silly boosts, and early developments of apex seals, in my opinion. A modern wankel like in the RX8 is pretty reliable if treated right, apex seals have come a long way. Run premix and you don't even have to worry about an oil pump.
Even when it comes to a rebuild, you have to remember, wankel engines really are beautifully simple at their core.
They have higher fuel usage than a comparable CC piston engine, but remember, they are producing much higher horsepower than that comparable CC piston engine, so that's not really a valid complaint IMHO.
Here's a decent link (more about the 13B from RX7s than the RX8, but gives you an idea): http://www.dmack.net/mazda/information.html
Plenty of Video goodies on Youtube if you want some braaaaaap aircraft action.