First time poster so sorry in advance if I've missed something but, I've got a couple questions and sort of looking for guidance a bit. (Lots of context / info incoming, sorry about the wall of text!)

2 Years ago I purchased my first boat, the engine had been recently rebuilt with a new piston set, ring set, gasket, oil pump (I was given the invoices at the time, he'd spent just under 5k on the rebuild which was partly why I purchased the boat).

In the 2 years I've owned the boat I've given it very little use (maybe 10 hours), flushed it after use, stored it out of the weather etc, fired it up on muffs every few weeks, and then since the start of summer taken it out maybe 5 times and its ran great!

Now on to the guts of things -> 2 weeks ago I was motoring along at around 5k RPM when the engine began to shudder and drop to 3k RPM (no horns / sirens were present). 

I immediately slowed and stopped the boat, tilted the engine to check for any obstructions on the prop, checked the primer bulb on the fuel was still good and restarted the engine. Unfortunately it still wouldn't go beyond 3k RPM, wouldn't plane and I had to limp my way back to shore at about 10knots (luckily it was a fine flat day).

I stopped about an hour from shore because I still wanted to get some fishing in, after being stopped for an hour or so upon restarting the boat seemed to run fine on all cyl at 5k RPM for around another 30min before the same thing occurred (shuddering, loss of RPM)

Since then I've taken the boat to a marine technician and asked them to take a look over things and see what could be causing the issue. What they said:

About an hour later they called back to let me know that after running the engine again and letting it sit, they checked the plugs and the top and bottom cylinder had water on them, they pulled the head and found that the top cylinder has a chip / crack into the water jacket which would be causing water to get into the top clyinder and potentially the bottom (both the top and bottom cylinder had a small amount of, sort of rusty water/oil residue in them).

Sorry for the massive wall of text here, just trying to give context! 

So to end things, basically what they've said is they COULD repair the head by grinding it out and welding then resurfacing but its unclear if they could sort of "guarantee" that work, at the time they were also not able to give me a quote on what that would cost $$ wise (no fault of theirs, this was about 5pm on Friday)

The other option they gave was for me to have a think over the weekend about repowering with another engine (I don't want to spend a huge amount here, so it would likely be something similar 2 stroke of around the same year or newer 70hp-90hp which from a few hours browsing around would be around $5000?)  

So I guess now to the exact questions

Lastly, I'm planning to call them this coming week but wanted to get some perspective before doing so.

Thanks very much for your insights folks!