RE: 1/6 - 1/8 scale PT boat
Sounds like a cool project.
Looked at [link=http://www.surpluscenter.com/engines.asp?catname=engines]Surpluscenter[/link] for an engine lately?
To water cool you need to have new tops made = $$$. I'm thinking a couple of diesels could possibly be aircooled with forced air - just throwing it out there... I like the idea of scale mufflers.
Check this link to size a [link=http://www.building-model-boats.com/model-boat-motor.html]model boat motor[/link].