If the heat exchanger is 90% efficient at transferring/recycling heat then the fluid is pre-heated and pre-cooled to 90% of the differential, E.G. instead of the heat source needing to heat 100F to 400F, it only needs to heat 370F to 400F. Likewise the heat sink only needs to cool 130F to 100F.
Now, it's creating the same work with only 10% of the input. This is a 10 x increase in system efficiency.
So instead of 5-10% efficiency, it's 50-100% efficient.
Adding such an exchanger to a steam engine (or any gas state heat engine) is not possible.
A gas is thermodynamic in two ways: it increases pressure as it gets hotter and decreases in temperature as it expands.
But the liquid is thermodynamic only one way: it increases in volume as it's heated but does not decrease temperature significantly as the pressure is lowered because the volume does not change significantly.
(a solid state heat engine has the same benefit, though it's trickier to make a practical design)