Jeff262

It is cavation, very common on jet boats, you will need to replace the wear ring, I do mine every year and check the impeller, also replace the carbon seal while you have it off. Not much on the 787 engine it go wrong either they work or they don't. But what u described it a bad wear ring. If you do I once its very simple and maybe a 20 minute project. Your first time I would say 2 hours while you keep looking at the website how to to make sure you are taking the pump off and getting the ring out..there are 20 videos on YouTube on how to do it. The wear ring is considered a normal maintence item on jet boats and I think they are recommended it be measured or replaced every year..they are a $35 piece.
Jeff

Sounds like oil in the crank being burned off. Even though u have pinched the lines there is still a lot of oil in the center of the crank that those seals are suppose to keep in there and when they go bad they let the oil leak into piston side of the cranks. It doesn't take much oil To get a lot of smoke. I'm not a fan of pinching since oil will still get past there but your problem is in the crank seals. Since it burns off you have a slow seal leak that will get worst My 2 cents Jeff

If your stuck at 3500 it's going to be the rev limiter. .if your trying it out on shore make sure you have it in forwards. When it hits the rev limiter it kills the engine and let's it restart at 2800 rpm so it sounds like bad carbs but it will just be the limiter. If you have it in forwards and still sputtering at 3500 you will need to bypass the forward switch. On e throttle
Jeff

If your stuck at 3500 it's going to be the rev limiter. if your trying it out on shore make sure you have it in forwards. When it hits the rev limiter it kills the engine and let's it restart at 2800 rpm so it sounds like bad carbs but it will just be the limiter. If you have it in forwards and still sputtering at 3500 you will need to bypass the forward switch on the throttle
Jeff