Won`t let me post more than one picture per post.. this site really blows now..

Don't see much difference, your post is clear and well done.
ben

To answer your original questions, all three are YES.

You want a drain hole on the bottom of the tip to drain the water out of the falling part of the header/tip. I think mine is 1/4".

And its a yes again about the RTV in the slip joint between the header and tail pipe.

Thanks for all the replies and pics fellas! Much appreciated!
We got the pipes modified over the last couple days. I'm a beginner TIG welder, so I asked a friend to come by and lend a hand.
j used a carbide 7/8" hole saw to cut a hole in the outer pipes as close to the inner transom as possible.
I cut some patches to cover the original "at the tip" water outlets while my friend welded in the bungs.

Here re are some pics:

Looks good.

If you want, itll probably be fine to have one hole to dump water in the exhaust if you want. May be a little late now as you welded them all up, but if it needs to appear like you have wet exhaust an 1/8 or 1/4" hole will let just enough in. Thats how mine is setup, I have lightning headers as well.

I took the wife for a boat ride last night and, much to my dismay, I still have wet pipes and collectors.
Looks like the tailpipes are blowing water up at idle and the exhaust is sucking the aerated water right up the pipes.

Im going to pull the plugs after work and make sure no water is getting that far up
the exhaust. The boat runs fine, and I think the water droplets are burning off before they get to the cylinders. (When I pulled the headers for the mods, the exhaust ports showed no signs of water)

also, im going to fire the boat on the hose to confirm it's a low exhaust / water being thrown about issue. I've pressure tested the headers twice and they are fine.

At this point, im leaning toward trying those rubber Salisbury flaps (hate those damn things)

Any other suggestions would be welcome. Maybe the Gibson inserts are the fix?

I have 20 degrees of advance at idle and I idle at 800 rpm.

thanks guys!

Try putting a yardstick up the exhaust before you start it let it idle then shut it down and see if you can see any water on the yardstick,maybe then you can see how far the water is getting sucked back up the exhaust.

I just measured from the waterline to the bottom of the tips.
My tips are only 4" off the surface of the water.