MetroMPG
Ref your cooling/sealing challenges - I have a natural law which states that "secondary effects are
always Primary"
Your mind is soaring with the optimum motor, and a left-over system from history is giving you grief.
If its any help with the power required, boats like this are (used to be) powered by British Seagull longshaft outboards. Altho plated as 4 HP, I understand they measured as about 1/2HP - but they had huge reduction and swing a large coarse prop. What they lost in power and honesty they gained in propulsion efficiency.
They would give a boat your size 3 to 4 kts and be adequate for most locations (except the Maelstrom or Minches)
For your relatively short running time you could probably also add more volts to your small motor to get the required performance - and watercool it if necessary for survival
andrew