Reason for foam flotation is best described by boat show experts walking the show floors:
"it's there to insulate your feet from the cold water"
"it's insulation dummy, it keeps the boat the right temperature since there ain't no radiator or heater or air conditioner"
"it's what keeps the boat at the right level in the water, add more foam & the boat doesn't sit so deep in the water"
(I've actually had customers want me to add foam so ther boat doesn't sit so deep in the water)
"It's the glue that holds the fiber and da glass together, without it & your gunna sink"
Another reason would be USCG regs require basic flotation for boats under 20' , level flotation for outboards under 20'
they also specify the type of foam, which does absorb water.
Flotation foam does offer a stiffining benifit that will make a boat feel more solid.
As a USCG inspected shop I must reccomend replacing water saturated foam with new replacement foam, from a more practical standpoint I can answer it like the guy who asked me if a holley carb off his race car could be used on his boat: Yes it may fit, it may work, it may even work better, and it probably would save you money....however if your boat was ever involved in any type of insurance claim the adjusters job is to minimize the insurance companies exposure, and therefore look to minimize their expense. A "modified" boat may disqualify you from receiving the pay-off you deserve! Espicially with a fire or sinking. just food for thought.......