If your going to build a hydromite there are a few things you should do.
1) Scale the plans up to at least 21". The boat was originally designed for a 480 size motor and 7 scr1700's. A larger hydromite can handle an 05 on 6 or 7 2400's or even 6 3300's. I've seen a 29" version that was really fast on 24 cells.

2) Balsa is fine. Just seal it with thined epoxy or Polycrylic. Done it many times , never had a problem. Make sure you seal the underside of the sheeting and hard to reach places before glueing the sheeeeting down.
If your still worried about the balsa not being strong enough go down one size on the balsa thickness and laminat a 1/64" piece of ply to it. If it makes you feel any better , one of the fastest " Electric, not gas or nitro" 1/8th scales in the country is built from balsa and sheeted with lite ply.

3) As stated earlier. Definatly use a jig to keep everything square and straight.

Go for it
Happy building and have fun.