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OK, well I guess you will first have to determine if the block is salvageable. Then you will need to examine the other pistons/cylinders very closely to determine their condition. These loop scavenged engines have their advantages, but are very intolerant to improper/worn piston fit in the cylinders…A couple thousandths off will probably leave you will an engine that is hard starting and idles poorly, even though compression numbers might seem excellent. So, if the block is salvageable, you will next have to look at the economics of the repair. In the long run, will it be more cost effective to by a rebuilt powerhead from one of the reputable places, or attempt to do the work in house. I don’t know if there is anyway of changing port styles on these powerheads. From what you described, it sounds like the rest of the engine is in very nice condition…But, don’t just assume this, I would go ahead and drain the gear lube to ensure their are no issues there, check the power trim to make sure it is functioning properly and not leaking down. Look over the rest of the engine to ensure there are no bent/damaged/cracked castings anywhere. The oil injection system should be completely inspected and serviced as well.
The water pump kit you mention will have all the things needed for the cooling telltale update, along with improved thermostat parts, and complete instructions for doing that job. I don’t think the "jet kits" are available anymore to purchase, but you can simply examine your high speed jets while rebuilding the carbs, then purchase high speed jets .002" larger. The OMC service manuals give part numbers for all the various jets.
It is possible that this update has already been done on your engine, usually there was a little sticker applied somewhere. Nonetheless, you can compare your high speed jets with what was originally prescribed in the parts book to determine if the update has already been done. Pontoon use is a pretty severe application for these engines. Lugging engines, messed up water supplies to the gearcase, along with water ingestion from crazy rooster tails, can kill outboards quickly. So, engine performance, cooling supply, and the correct style/pitch prop are a must. The owner should be educated on how to run the boat without beating the tar out of the outboard. This engine should turn up a minimum of 5500RPM at WOT, although its optimal throttle setting is probably about 2/3 throttle.
Dan raises a good point about having the proper machine shop do the boring work, this is not something that should be entrusted to shops that haven’t had experience with these engines.