A new concept of a dynamically controlled reactor, which combines the variable volume operation of CHAMP (CO2/H-2 Active Membrane Piston) with direct injection of liquid fuel of DDIR (Direct Droplet Impingement Reactor), is introduced and analyzed with the primary goal of identifying conditions for the highest volumetric power (hydrogen yield) density. In the proposed CHAMP-DDIR, a liquid fuel mixture is pulsed-injected onto the heated catalyst surface for rapid flash volatilization and on-the-spot reaction, and a hydrogen selective membrane is collocated with the catalyst to reduce the diffusion distance for hydrogen transport from the reaction zone to the separation site. Uniquely, CHAMP-DDIR allows dynamic variation of the reactor volume to optimally control the residence time and reactor conditions (pressure and temperature), thus improving both the reaction and separation processes. Idealized CHAMP-DDIR simulations, without heat and mass transfer limitations in the reactor volume, are used to determine the theoretical limits on power density for various operational conditions. An enhanced CHAMP-DDIR model, which accounts for the effects of mass transport limitations and bulk temperature changes in time, is employed to evaluate possible performance improvement through combining time-modulated fuel introduction and the active change of reactor volume. Analysis reveals that significant improvement in the volumetric power density can be achieved primarily as a result of two factors: time-modulated fuel injections enable higher reaction/permeation rates by preventing the large temperature drop that accompanies a single batch liquid fuel injection and volume modulation during a batch cycle allows for reduction in required reactor volume under a constraint of maximum operating pressure.