Well your setup is unusual but I think it can at least be made to work . This is after-all a learning experience.
A 1/8" shaft can be dealt with,even with this much power. I have run several 12 cell and 700 powered hydros using 1/8" shafts adapted up to 3/16". The real problem for you is your scources for props. As you now know not just anything will do. I have a Octura Y534 that will fit right on a 1/8" shaft and may work. Its still plastic but a good performer and very cheap. The shaft can be adapted up for 3/16" props . That will give you a good selection of props to try. If you local shop does not have many props suitable then you may have to send for them. This is something most of us have to do. n.h.schmidt