Got a few bugs worked out - burned up a motor and snapped a few shaft couplings - but I think I have things working well now. Got a few good free runs out of it, tied to a fishing line to retrieve it. Battery is a 400mah LiPo. Now that I know the motor has the power to plane off the boat, I will add a micro servo, 6A ESC and a receiver to make it RC.
Shell is a Nylint toy Mercury outboard motor. Electric motor is a Mabuchi RC-260RA with carbon brushes. Modifications include the new motor (replacing the original RE-260), a shimmed propshaft to take up the sloppy gear lash, heavier duty coupling and lots of grease on the gears and bearing surfaces.