Hi yyk,
I'm not familiar with that model, but if the engine fits in it should be fine. The FP engines are not a heavy engine so balance shouldn't be too much of a problem. Diesels are quite frugal so the existing fuel tank should be sufficient. You will have plenty of power too.
I hand start all my engines, Diesels included. With the correct priming and compression setting they all start first flick. Sometimes the starting compression setting is close to the running compression setting, sometimes you may need to reset it for hand starting (it varies depending on what size prop you have, a large prop will need a low compression setting to run which may be too low to start, while a very small prop will run with a high compression which might be too high for comfortable starting).
Priming is important for hand starting, too little and it may fire but won't start, too much and you risk hydraulic lock as the others have all said. A flooded Diesel won't fire at all. They will start on just a whiff of Ether but need some fuel in the crankcase or at the carb to keep running until they start drawing fuel.
The vintage Diesels generally aren't designed for electric starting and can be easily damaged by it (plain bearing crank will move back and either the crank pin will rub on the back plate or the drive washer will rub on the case causing wear), however modern engines converted to Diesel can be electric started easily as long as you are careful not to hydraulic them. Electric starting will often allow you to start at the running compression setting although you might have to richen the needle a bit till the engine warms up.
In the end it's what works best for you and your set up. If you go electric make sure you flick the engine a few times to confirm it's clear before you use the starter.
Let us know how you get on,
Dave H