Re: 1954 Evinrude 7516 questions

[Don]

I’m with Frank, I think it will run fine without further powerhead disassembly. Recheck compression after you get it to run a bit. Perhaps you can just try to start it the way it is if there is spark, then recheck compression. Looks like you have already had/have the powerhead off, so am hoping you replaced the water pump impeller and checked/changed the gear lube. Hoping you serviced the lower seal components on top of the driveshaft as well.
Those shift handle bushings do get sloppy, there are no replacement NOS bushings available. I would run it the way it is, be sure to replace the shift lever oring, and don’t got to concerned if you see water dripping from the shift handle, this is not big deal and has no effect on reliability. I know Mumbles has engineered some sort of bushing replacement for this issue, so you can always contact him if you decide to replace the bushing.
The plastic bushing in the vertical throttle gear is no big deal either, I’m sure you can find a replacement for less than the OEM price. But, like Franks says, the gear stem might be worn also. Shouldn’t be hard to find a used one of these either.
So, I guess I would probably try to just get the engine running doing the minimal amount of work first to ensure all the internals are OK, if possible, before going crazy on the detail stuff.
Looks like Mumbles has already posted a nice how to on replacing that shift handle bushing!