A lot has happened with my boat since my last post, so I feel like I owe a followup post. I ended up going with a re-machined long block I found locally on craigslist. It was rebuild by S&J engines out of Washington state.
https://www.sandjengines.com/ It was still on the crate in plastic so I took it for $1600. I primarily went this route due to cost and schedule. The cylinders/pistons are oversize 0.015" and everything else is marine stock some new some used parts. The only performance improvement I went with this time around was a low profile performance intake manifold - Edelbrock 2181. I was able to reuse much of my old parts - the use of a sandblaster is amazing.
New: Distributor, coil, intake, water pump, starter, damper, valve covers
Used: alternator, aux water pump, pulleys, damper (with new sleeve to protect new crank seal)
A few tips I learned along the way...
-The negative side of the ignition coil can be deceiving, it does not go to ground or it will never spark!
-Valve cover gaskets - I used black RTV on the cover to gasket side, and motor oil on the gasket to head side, so far works great and the cover can easily be removed for inspection and the gasket reused.
-Transmission inspection - I tore down the transmission, it was full of black gunk and all the springs were rusted and broke, the reverse piston seal was stuck pretty tight which is probably why the whole drive train shook in reverse. New springs, gaskets, and seals and it's running fine. I opted not to replace the clutch disks as it would have required new bearings and a press. Keeping things nice and clean is the key!
-Shaft - I did a run out measurement on my shaft using 'V' blocks and a dial indicator and found it had a high spot of 2 mils. I used a clamp and some heat and reduced the runout to 0.5 mils
-Alignment - I will probably get scolded here but I will share that my coupling face to face gap was likely far greater than 3 mils. I found the most important thing is that the strut bearing and shaft line up with the center of the shaft log. I moved the motor and transmission the best I could and bolted it all up. So far so good, I feel like this arrangement is very forgiving.
-I welded a NPT fitting to the oil pan and added threaded fittings and a valve for ease of oil changes - just connect a hose through the hull. I did the first oil change after 15hrs and it worked great (compared to dumping 5 quarts into the bilge, been there).