First thing ditch that air cleaner.It restricts air flow and isn't needed on a boat.You can choke it with your finger.Close off the original exhaust holes on the muffler and put two 1/2" stacks out the top,with 90 deg elbows to blow the exhaust to the side.You can stuff the crankcase by adding a piece of aluminum or heat resistant plastic to the inner face of the crank cover to get it about .020 from the crank pin surface.Might give you a couple hundred more revs.Also get rid of the Champion plug and get an NGK for it .I've been playing around with a Weedeater brand 22cc and added a Walbro carb with a slightly larger venturi and noticed big difference in acceleration.Depending on your engines intake and exhaust you may be able to do some mods there.Due to its limited output and size I'll probably convert my engine to an airplane engine someday.Here's a pic of a Poulan engine in a boat.
http://www.martysrcboats.com/pix/bille.jpg