Summer 2021 one of the two Mercruiser 383s in my dad's boat had a water pump fail, and it got a little hot.
Water pump replaced and no issue since.
3 weeks ago the exhaust valve seats dropped into cylinder 6 and 8 simultaneously at IDLE speed.
After tear down both pistons wrecked, both cylinder walls cracked (I am assuming this was a result of wedging the piston in the bore trying to compress a valve seat, happened to me before)
The engine had only 200 hours on it. Mercury was no help, out of warranty.

What caused this? Has anyone else had this happen? Is it related to overheating over a year ago?

Follow up question, got the engine swapped in one day, and the new engine is identical to the old, but it has higher fuel consumption according to the Garmin than the engine on the other side (18gal/hr vs 16.5gal/hr at cruise), any normal reason that might be? Previously both engines were nearly identical on fuel consumption.

I would look for crack/s in the heads in the valve seat boss area. That would explain them falling out. Maybe do a Dye penetrant inspection on the suspect area?.

Were the engines re-manufactured or new ? I don't remember what heads are on those but I didn't think they had exhaust seats from the factory. I have only seen a couple over the years so i might be wrong.

As far as the fuel consumption goes are you sure the "new" engine is identical ? Maybe bored .030 though I wouldnt think that would make that big of a difference in fuel use.

I had a exhaust valve seat drop, but about 720 hours on the motor. (Merc 350 Mag EFI/MP) Happened at lower rpm. Cause was an injector that leaned out, detonation ensued, knock sensor retarded timing and heated up the exhaust valve seat. It finally had enough and took the engine with it.

From what I understand the 383s from Mercruiser are remanned 377s, bored 40 over.
No cracks are visible in the head, but what is weird was the simultaneous dropping of 2 valve seats.
Checking the injectors is a good idea, but since it happened at idle I wouldn't think leaning out a cylinder at idle would do much other than make it miss.

Its still a very good idea. The seat might have come loose earlier and was just waiting to fall out. Slowing to an idle changes the temperatures in the head so you never know. And I have seen exhaust gas temps go way up at idle if the tune isnt correct. Especially if there is not enough timing.
If the injectors have a lot of hours on them I would probably replace them.

If the injectors are clogged or flowing poorly then the lean damage occurs at higher power settings, but then the damage is done and they can fall out at any time, including idle. You are assuming they are only lean at idle, but that is not the case.

Seen some seats crack on the 906 hd heads with the inconel exhaust seats ,and lots of tuliped intakes and a few lost valve heads on the 062's,often accompanied by water inrusion from a bad manifold , throttle chop ,engine stall at speed ect .would make sure water pressure ok on your replacement engine for peace of mind

Update on the replacement engine: Oil pressure continued to drop until it could not maintain cruise without alarms sounding. Oil pump/pickup issue? Think this may explain the higher fuel consumption.

Mercury replaced it under warranty with a new long block, will update next summer if this one also fails....
On the upside we are getting pretty good at pulling the engines from this boat, in and out in just a few hours.