LSP- Yep, ur right about exhaust & muffler issues if u want to put a pitts muffler for a 4 stroke on it. They are a bit pricey, and like u, I didn't want to chop up the cowl. The OS 65AX would work fine for this plane.
A couple specs for u about these engines. The OS 65AX is rated at 1.73HP(although Tower rates it at 2.0HP),has a power band of 2000-16,000RPM-- The OS 75AX is rated at 2.37HP with a power band of 2500-16,000RPM. Horsepower ratings will vary with prop selection. Now comes something else to look at- Prop selection- The 65AX recommends 12/6-7, 13/6-7, 14/6. I'm sure u can vary that with different pitch props. The OS 75AX recommends 14/6-7-8, 15/6-7. If u fly off grass, u may have to look at ground clearance with the bigger diameter props, as the L/G isn't real high.The prices for these are 209.00/65AX-- 229.00/75AX.
I liked the OS 61SF long stroke pattern motor for it's higher torque, and is rated at 1.9HP @ 16,000RPM. Now looking at that, it will be a little lower with prop. I did some bench testing on mine, and when I did the maiden on it, I started with an APC 12/7, and it turned 13,200RPM-- APC 12/8, 12,500RPM-- APC 12/10, 11,400RPM. All of them flew fine for sport, basic aerobatic flying, and the 12/10 really worked for the 3D that my buddy did. I fly off grass, and don't have any issues with ground clearance, but as noted I did put a little bigger rubber tire on it VS the foam tires that came with it.
Another motor that will work excellently is the OS 61FX, rated at 1.9HP @ 16,000. It runs beautifully with a 12/7-8 prop. If u look around, u should be able to find any one of these motors reasonably priced. If u can't find one, drop a line- I still have a few. If u go back and look at my crash writeup, I think I weighed my bare plane(No motor,elect, tank,servos,rcvr,batt) and the AUW was around 5 1/4 Lbs. I think when finished and RTF, it came in at 7 1/2 lbs. It doesn't take a lot of power to pull a 7 1/2# plane around. That all depends on how u want the plane to perform, and ur flying style.
I thought I might throw around a few specs that I looked up when I was doing the refurb on mine, and how I made my selections. Let us know how u will proceed, and what u decide to use- Good Luck, Dean