John,
I forgot to answer the last couple of questions.
5) try a duramax or pss seal as I previuosly pointed out. The are designed for this application.
6) don't consider a oil bath white metal bearing. Do expensive and just not for this application.
Try to get hold of any books by Dave Gerr or Ted Brewer about props, shafts, engines, systems, boat design etc. I have a couple at home which are good basic reference books for the amateur. They are written in a style that is easily understood. Try Amazon or book depot. Will set you back less than $20 per volume. They are well worth the investment.
Best of luck with your project. I look forward to seeing the progress on this forum.
Eric (Brisbane, Australia)