Can you block off or divert some of the water that comes out of the distribution tube? At the end of the distribution tube they have a hose that goes up to tail or collector. I would like to cut back on some of the water going out the transom, so my ideal questions is I would like to dump some of the water over board.

Why????????

NOOOOOOOOOOO!!!
I had extensive discussions with CMI.

They reccomend NOT using the tube from the bottem rack to back of the tail pipe. The more water gets into the headers, (up front) is better.
Remove the rubber hose, plug the rear bottem rack. Plug the bottem tube in the tail pipe, REPLACE the ristrictor at the "jumper" hose from the header to the tail pipe. With this "NEW" revision the restrictor hole needs to be bigger. Merc. and CMI has a part No. for this. Make sure it's the right one. Don't let my misfurtunes be yours. I can look up the part no. if you need it. The "NEW" ristrictor will have about a 1/4" hole. The old would have about a 3/16" hole.