Other then using a 4-pole alternator to run the engine at 1800 RPM's instead of 3600, the part of a generator that seems to make the most noise is the cooling fan which in many cases runs as fast as the engine, while I have seen a few belt driven fans, where the belt broke and you could almost carry on a conversation next to the generator without the fan running, if they would go to high volume squirrel cage blowers and run them at a lower speed, the rest of the engine noise could be dealt with by a better exhaust system, my car is so quiet sometimes I try to start it even when its running but a car engine running at 600 RPM's at idle is a big difference then when it is running at 3600 or even 1800 rpms, but thanks to the starter disable system on newer cars that keeps you from engaging the starter after the engine is running or I would be replacing a few starters.
I have did a generator that the homeowner built a double layer block wall around it leaving the side away from the house open, and they would put a slanted roof to allow heat to flow up and out of it, worked great as you could not hear the generator inside of the house, but the neighbors might not like it as it funneled all the sound toward their houses.
The main problem with putting the generator in an enclosure is getting rid of the heat, a 20kw generator engine will produce some where around 80k to 100k btu's of heat and the alternator another 5 to 10k of btu's, and thats allot of heat to remove which will take quite a bit of CFM's to remove it out of an enclosure not to mention make up air for combustion, I had a couple who wanted to build an underground concrete vault, but I told them I could not warranty such an installation because it would be to hard to remove the heat and provide fresh makeup air for the engine to run on although the make up air would have been much easier then the heat problem as you are not only removing the heat from the engine but also the alternator, I would think that most generator manufactures would void their warranty if it was installed like this.
An inverter output generator system would allow the engine to vary on load demand and would mostly idle at night when the least loads were used except when the air conditioner or electric heat would cycle, but inverters get very costly once you get above the 5kw range especially the full sine wave inverters which is all I would ever recommend because allot of electronics with switch mode power supplies don't like the modified sine wave, burned up a power supply in my computer once and a couple of my Dewalt chargers trying to run them on modified sine wave inverters, although all you have to do is throw a transformer with primary voltage taps on the output of the inverter and you will get a some what close to being a full sine wave output that can be adjusted if the inverter output voltage is a little low, but then you now have the loss of the transformer to add to the load on the inverter.
At one time I started designing a generator system with inverter output, that also used a battery or two feeding the DC buss to provide power to the inverter like the hybrid cars that the engine would shut off until the battery level got below a certain level or a heavy load kicked on, the efficiency over a standard generator would be almost cheaper to run than some utilities charge for electric like our utility (but I would have to have the numbers crunched to be sure), if NG cost stays as low as it is now, just think now you would be using the utility electric as a back up instead of the other way around, you could use any standard ATS just land the utility feeds on the generator lugs and the generator/inverter feeds on the utility lugs and since the generator would always be online and only started on battery voltage sense, the start circuit would be just disabled in the ATS, when the utility electric becomes cheaper then the NG just have a control to swap the system to use the utility as the supply and the generator as back up, add a few good sized solar panels on the roof or out in the yard and you lower the cost even more and might be able to stay off the grid with NG the only other source as the engine would not run as much.
Got as far as dating and notarizing the paper work but never got the numbers crunched or could find a low cost source for high output full sine inverters which getting up into the 10kw to 20kw range made the system not very good on ROI?