Yes, it will alter the balance. This can be used to advantage (Imoved a firewall in 1-1/4" when mounting a G-26 in a Phaeton II). You want to bring the C.G. to the spot indicated on the plans or per the instruction manual.

Will it alter the flight characteristics? As told above several times - no. Some full scale aircraft went from radial to in-line and vice-versa in their development and through various marks (the Navy preferred radials and converted several . As long as the C.G. is kept you'll be fine.