7.4 mercruiser

I have a 1998 330 Sundancer with 7.4l mercs that still has the factory log style mufflers. After some problems this spring and some investigation, water seems to be getting pushed backwards up the elbow and sitting on the exhaust valves at shutdow, but apparently only on the outboard side...

I just purchased a Sea Ray, looking to bring it back to life and re power my 92/93 Sundancer. It currently has twin 7.4 mercruisers. Option 1 replace exactly what's there. Anything additional I should do? Option 2 replace the motors and go throttle body Option 3 convert to diesel Option 4...