If I were you I would contact Alex Haxby now.

I am not saying anything about your engine guys' credentials but Alex has built many a 502 for boaters including guys on OSO.
Call or email him to get some straight poop. I would not hesitate to drive the 7 hrs to his shop from your house.

http://www.haxbyspeed.com/

Thanks...I'll keep him in mind, but across the border would be a slight disadvantage for me...Although, been up there twice for Mustang car club events.

I've learned a few important things already about this boat's issues...The latest being the recent re-direction of the exhaust back through the Bravo I...I hadn't thought of it as being a higher horsepower necessity. Wondering if there was a direct correlation between the restrictive exhaust, water in the bellows, & #3 cylinder's exhaust & intake valve's issues from an apparent steam event. When we see the condition of the internals I'll be in a better position to decide either to dial back the power or fix the weak links. Thanks for all the input.

Reading up a bit on reversion this weekend and wondering which came 1st...the water or the valvetrain damage...with the unknown specs of an aftermarket cam, EMI THUNDER low riser, I'll want to address that before hitting the water next spring. Anxious to get a part number off the mystery cam but it's looking more like going back to a near stock cam is in my future, makes my carb work better, my prop work better, and the exhaust work better (including the fact that the thru transom exhaust was disconnected).
http://i690.photobucket.com/albums/v...s/IMG_2122.jpg

The acute angle on those riser connectors for the y-pipe is one reversion issue on your combo.

Just before I picked up the boat, the consigning dealer changed the exhaust configuration to make it quieter. As I look at the box of parts I see the mechanical diverter had been "fixed" into a position to feed exhaust thru both the prop and the exhaust tips. Is that even a workable alternative? Could that (the elimination of the "Y" plumbing) have actually caused or contributed to this mess?

Post some pictures of your transom from inside the engine compartment.

The motor is out & the boat is all buttoned up for winter...Disregard the cover it's not a 5.7 Alpha (anyone have a 502 cover or stickers?)...Here are some pics just prior (with the engine hatch off & curbing removed):
http://i690.photobucket.com/albums/v...7/DSCF0152.jpg
http://i690.photobucket.com/albums/v...7/DSCF0153.jpg
http://i690.photobucket.com/albums/v...7/DSCF0154.jpg

Thanks for the input!

Any input/advice is appreciated? How about proper advice to the correct questions?

As of now the only thing we know is that you suffered valve train failure. Was it from over revving your engine running a 19P prop and relying
on the RPM reading from a tachometer from 1992? Probably.
Did you suffer reversion? How the hell can we know? We are not clairvoyant. Your engine builder will be able to address all these questions.
If he can't then you need a different builder.

Worrying about which oil filter to use or where you should place a 30 lb. bypass valve is a bit premature. Find out what parts are in the engine,
what needs to be replaced because of damage, and what kind of performance you want to have will dictate most of your decisions.

Rebuilding a 527 HP engine to a stock 502 configuration so that you can utilize a 750 cfm carburetor already in hand is just plain stupid. This
may be the reason the gear heads of OSO are ignoring this thread.

Your boat's former owner's claim of running 70 MPH with the 527 HP engine is not out of the realm of possibility.

For comparisons sake my Cobalt 233 runs over 72 MPH with a stock 502 Mag MPI.
--- I removed the stamped rockers for Crane Golds.
--- I removed both bypass valves and tapped/plugged the outer hole.
--- I run a digital tachometer from Aetna Engineering. http://www.aetnaengineering.com/
--- I run 25P props Rev4, Mirage, Mirage Plus

Get your engine apart and then evaluate the parts, broken or otherwise, then start making decisions.

Good luck.

Here is your engine cover:
http://www.ebay.com/itm/Mercruiser-E...lV9yh6&vxp=mtr

Correcting the exhaust...
 

I'll try to not ask TOO MANY more stupid questions. While waiting to get the longblock torn down I'm realizing the exhaust set up as purchased (remember the consigning dealer's mechanic had set it up to go back through the Bravo 1 only because of noise) may be the culprit as they used 4.3L V6 elbows (#14478) to make it work...there ARE signs of water backing into the head @ the F'd Up #5 exhaust & intake...there ARE signs of water @ the correlating exhaust manifold port...there is also a dimple that is showing water leak in the manifold directly above #5 (see picture/ not sure if this is just a coincidence as the leak would be towards the engine compartment).
So while I wait to see the internals damage report, I'd like to start planning on fixing this STUPID exhaust situation.

Side view: http://i690.photobucket.com/albums/v...7/IMG_2155.jpg

The external dimple leak: http://i690.photobucket.com/albums/v...7/IMG_2154.jpg

The V6 Elbow: http://i690.photobucket.com/albums/v...7/IMG_2153.jpg

Thanks for any constructive advice you can give...I'll do a manifold leak check if that dimple doesn't automatically create buying new...Also I'll get the old plumbing back installed even if loud.. the diverter's are fixed/bolted to direct to both exhaust routes...http://i690.photobucket.com/albums/v...7/IMG_2158.jpghttp://i690.photobucket.com/albums/v...7/IMG_2157.jpg

What is the water level while sitting in the water with people on the back compared to the riser level? I have seen a lot of bad things happen when you back your boat in a steep ramp and it doesn't slide off and get level quick. fills those risers and manifolds right up. Its just something to check