First of all, I will state that I own a cryotreating facility. I am also a metallurgist and co-chairman of the ASM (American Society for Materials) committee on cryogenic processing.
A lot of things happen when you freeze metals to cryogenic temperatures. Yes, austenite is transformed to martensite and the martensitic crystal structure is bigger than the austenitic. (which really makes you wonder when some cryotreaters claim that they "densify" metals.) Other things like vibration, and heat will also cause austenite to transform. So if you put an engine together without cryogenic processing, the transformation will occur over time and really mess up your engine.
Cryo also relieves some residual stress. Again, heat and vibration can do the same. That results in the part warping in use. We've seen untreated cylinder heads warp 020 inches in use. (I used to work for Fel-Pro.) In short, cryogenic processing stabylizes metals so these changes occur before assembly. So assembly is not everything. Careful assembly of stabile parts is everything.
A lot of other things happen at cryogenic temperatures. Point defects in the crystal lattice structure change. The solubility of alloying elements decreases, causing them to do some moving. Vacancies in the crytal move out of the structure. Very fine carbides form, which enhance wear resistance. We think that we are making the distances between atoms in the crystal structure more regular, but that is theory at this point. Fatigue life increases.
Yes, all of this is more important if you are running on the edge. And yes, you can on certain engines get a 400% increase in life. (We had a customer get 500% increase between rebuilds, and he was a national champion in his class.) There is a decrease in friction, but you are better off using a performance polish such as REM for that.
Certain items such as valve springs last considerably longer. Our drag racing circle track and road racing customers get about a 600% improvement on valve spring life. And when you are spending $400 for a set of valve springs, making them last six times as long is a moneysaver.
Is it snake oil? Porsche does not think so. And over half the NASCAR field runs on parts that we have treated. By the way, get your brakes treated as they will last two to five times as long.
Cryo is worth the money if done correctly. Watch out for the guys with a dewar of liquid nitrogen and a styrofoam beer cooler. Go with an established firm.