I had a Seamaster for several years. It was my first sea plane. A bad switch caused its demise at Havasu this year. Oh well! With respect to fuselage leaks -- I did get some leaking until I did the following: First, I plugged the holes where the main landing gear and nose gear entered the fuselage ( I never planned on flying it off land so this was not a concern for me.) After flying it the first day I still got some leaking. So that night I put some silicone on the wing saddle, covered it with waxed paper and then tightly replaced the wing. The next morning the silicone had dried and I removed the waxed paper and had a nice seal between the wing and fuselage. This cured about 90% of the problem, but I always got some water inside the fuselage. To alleviate most of the water problem, tie wrap your receiver to the former just in front of the servo tray so that it doesn't sit at the bottom of the fuselage where water can get to it. On another note, don't worry about tightening the water rudder so that it remains in the down position all the time. Just put it in place and let it flop up and down. Vibrations will allow it to go down and stay down while taxiing. Power -- I used an OS 46 FX with a MACS muffler and it would do anything I wanted it to do with the exception of hover/torque roll. Later I replaced the MACS muffler with the stock muffler and still had plenty of power. Your MDS 40 should be sufficient, but its not going to WOW any body. Overall, the Seamaster flys very well and can handle some wind and rough water. Make sure you absolutely keep the wings level when landing or else one of the wing tips will "dig in" and the plane will ground (water?) loop and kill the engine. The Seamaster was never my best sea plane but I was always glad to have it in my arsenal and took to every float fly.
Cheers,
Midget