The Task:
Start by shopping for the EA-82 Subaru engine in your local salvage yard. Look for low milage 1985 - 1986 Subaru, fuel injected, overhead cam version equipped for an automatic transmission. You will find them in the 400,- to 800,- price range depending on their age, condition and mileage. Most recent www search resulted in an 650,- estimate + S.H. While out scouting, begin your search for a rebuilt model HBW 150-1.5 Hurth transmission. A new one costs around 1.200,- , but you can get a rebuilt one for 800,- to 900,- including the vibration damper that will be bolted to the flywheel and has a splined hole to accept the input shaft of the transmission. ( The "-1.5" in the model number indicates a forward output ratio of 1.56)

It is very important that you acquire a Haynes "1980 - 89 Subaru Automotive Repair Manual". This has a wealth of information describing the disassembly and reassembly sequence, specifications, torque requirements for fastenings, timing procedures, and other vital information. Try to understand each task ahead. In addition to specific parts replacement guidelines, the manual is a guide to the accepted rebuilding procedure. If possible, before purchasing and dismantling the engine, it is a good idea to check the compression (this procedure is spelled out in the manual and may be performed without actually running the engine). This test will give an indication of engine's general condition, and of any internal wear. Worn piston rings, scored or worn cylinder walls, blown head gaskets, or sticking or burnt valves, are potential culprits. Before any attempted is made to convert the power plant for Hovercraft / Marine use, it is advisable ( if not necessary) to disassemble the major components, determine their general condition, and replace them if necessary. The tools required for this , with a few exceptions, are listed in the Haynes Subaru manual. More in depth work will require certain special tools, many of which can be rented from a local parts jobber specializing in automotive work.

While the engine is disassembled, degrease and clean all surfaces - including carbon deposits. Not only will this prepare the parts for future painting, but it will make working on them a more enjoyable task.
A word of caution: Never use a caustic solution when cleaning aluminum, and always coat internal threads with an anti seize compound. To marinize the engine you must modify these systems:

• Drive
• Mounting
• Electrical
• Exhaust
• Cooling
• Fuel

(Hovercraft) To allow your CG to be in balance with the craft and have a straight belt connection to your prop shaft install the engine with the transmission facing aft,
(Boating) To accommodate a midship engine location in a small boat, and still maintain a modest 12 degree angle, the propeller shaft must pass beneath the crankcase. This results in positioning the engine so that the transmission faces forward,
( both ) with the power being delivered to the propeller by means of a molded rubber cog belt having positive slip proof engagement without lubrication or high belt tension.
Why did we specify an engine equipped with automatic transmission? Because the manual shift transmission case and mating half of the bell housing is all one piece, and there is no way to separate the two. The automatic transmission case, on the other hand ,is a bolt-on attachment to the outer half of the bell housing. Once this is disassembled, there is no use for the torque converter and its drive plate, and these parts may be discarded- to be replaced by a manual shift flywheel and clutch cover from a model EA-82 Subaru engine (these parts may also be obtained from a salvage yard). Following a simple rework consisting of removing the finger springs from the clutch cover - these to be replaced by a Hurth vibration damper - the new components can now be mounted to the engine's crankshaft. The transmission is attached to the flywheel  bell housing using 1/4" thick aluminum adapter plate. The splined input end of the transmission engages the vibration damper. The output end of the Hurth is designed for a flexible coupling. As we have no use for a coupling in this instance, a simple turned stub shaft is attached to accommodate a commercially available sprocket for the cog belt.
(Hovercraft) Although not part of the conversion, it will be necessary to support the prop steel shaft on both ends with self-alining sealed ball bearings designed to absorb both the thrust and radial loads supported from engine mount forward and support fins aft.
(Boating) Although not part of the conversion, it will be necessary to support the inboard portion of the propeller shaft. This is best accomplished by a welded aluminum member containing two back to back flange mounted self-alining ball bearings designed to absorb both the thrust and radial loads. This assembly is then securely bolted between the boat's fore and aft stringers.
 

The Mounting System

The engine, when installed, is completely isolated by rubber shock mounts. Even the prop is rubber-belt driven,  so very little vibration is conveyed to the craft / boat itself. The mounting system serves three functions:

• It bears the weight of the engine and absorbs torque
• It provides lateral support to prevent oscillations in the vertical axis.
• It maintains parallelism between the engine and prop shaft.

Electrical System
The engine you purchased had many automated devices and sensors including the ignition, all controlled by a "brain box" or electronic module,located somewhere in the trunk of the vehicle. To avoid the complexity of handling bundles of wires, hooking them up, and conducting checkout procedures, the electrical system for the conversion has been basic and simple.
Breakerless ignition is a great improvement over the earlier breaker type, and many units are available in the aftermarket. You can purchase one from J.C. Whitney Co.; it is very easy to adapt following the instructions from the supplier.It's also recommended you replace the existing ignition coil, ballast resistor, plugs, and ignition wires with new ones. A safety switch, activated by the transmission's shift lever, prevents inadvertent engine starts while the transmission is in gear.
Having dispensed with the "brain box", the engine must be converted to a carbureted version. The carburetor chosen for this application requires a remotely located automatic-choke unit. This device contains a bimetallic spiral spring which, when heated by an electrical current with the engine running, will slowly cause the choke to open.
The wiring diagram shows the wire terminations, and AWG wire sixes, and all are labeled as to their destinations. All wires must have at least stranded copper conductor with PVC insulation and be fitted with crimp-on, insultated ring-type terminals. More than two wires are to be carried in flexible split-wire loom supported on loop clamps. It's good practice to apply wire markers to the ends of each wire using a number code. To be of value, this number should be marked to the corresponding wire on the wiring diagram; this will be a big help when you wire the whole craft.

The Exhaust System

As the engine's exhaust exits downward close to the bottom of the craft, two problems present themselfs:
1.) How to get rid of hot gases without burning a hole in the bottom of the craft.
( Boating)
2.) How to elevate the water-cooled exhaust well above the surrounding water in which the boat rides.

Both problems are solved simply by injecting engine cooling water into stainless-steel mainfold tubes leading to a water-lift muffler that carries the water and gases well above the waterline.
The stainless-steel mainfold tubes are fabricated from 316L stainless-steel tubing having a 90 degree elbow at the inlet and another 90 degree elbow rotated at right angles at the exit end. The inlet elbow has a welded exhaust flange mating with the engine exhaust port, as well as a 1/2" -diameter stainless-steel tube welded into the bend of the elbow; this tube sprays cooling water, which mixes with exhaust gases.
The exit elbows of the mainfold tubes are connected by watertight coupling to the sides of a water-lift muffler.
These tubes are structurally robust and designed to support the muffler without further attachment to any part of the boat.
The water-lift muffler is a molded, "glass-epoxy-reinforced, watertight enclosure containing two opposed entrance pipeson the sides and a larger vertical fiberglass standpipe extending within an inch of the bottom.
As exhaust and water enter the muffler, water begins to accumulate, as soon as the water covers the open end of the standpipe, pressure exceeds the head created by the elevation of the curfed, reinforced, flexible exhaust hose well above the waterline, then the combined water and gas are directed downward and overboard through the transom exhaust port. This results in a back pressure, to be sure, but this is rearly over 3/4 psi, which is quite acceptable. The water-lift muffler can be built in a couple of days. It is compromised of two "glass-epoxy shellsmolded within the interrior of two inexpensive plastic waste baskets, acquired from almost any department store. Once cured and extracted, the molded shells are bored to accept commercially available fiberglass exhaust pipes. These individual parts are then joined using thickend epoxy as adhesive in conformance with the dimensions of the drawing.

The Cooloing System

This engine has a closed, recirculating freshwater cooling system. The primary advantage of a freshwater system is that contaminated water and / or seawater are never introduced into the aluminium engine block, which would be devastating over time.
Basically, the system is quite like that of an autombile's cooling system. Water mixed with antifreeze ( a good rust inhibitor ) is circulated at a thremostatically controlled temperature throughout the engine whereupon it is directed to a heatexchanger, the equivalent of a car's radiator; the water is than routed back to the engine.
The vertically mounted heat exchanger in the application contains many small - diameter copper  tubes through which raw water passes on its way to mix with the exhaust gases and out through the boat's  exhaust line. The space surrounding these tubes contain's the engine cooling liquid. As both liquids are being circulated by their seperate pumps, the engine heat is transferred or given up to the cooler raw - water tubes. In addition to this, an expansion tank is affixed to the upper portion of the heat exchanger to acommodate the volumetric changes due to temperature differences from a cold start to a running condition. A pressure fill cap is used to prevent boiling and loss of coolant.
In practice, raw water is picked up near the after portion of the boat's bottom and drawn upward through a screentype strainer, then through an oil cooler,then to the inlet side of an engine-belt-driven impeller-type pump.
The outlet from the pump is directed to the heat exchanger. Once leaving the heat exchanger, the water is guided to a reducing tee, where the stram is divided to enter the twin mainfold pipes, joining with the exhaust gases.
Since the raw water exits into the exhaust mainfold tubes which are locatedbelow the boats waterline, it will be necessary to provide a siphon-break valve installed at the discharge side of the raw-water pump. Without this device, water could fill the muffler by siphon action and eventually flood the engine upon shutdown. In general, all hose clamps should be stainless-steel (please verify that the screw is as well ss)  and unless otherwise specified, all fittings should be brass.

The Fuel System

The fuel-injected version of this engine requires six electronic engine controls  including a costly electronic control unit (ECU) along with seven enviormental emission control devices.  Since a boat never has to contend with continual variations of engine speed, hill conditions, altitude changes, and severe temperatures, a simple single-barrel carburetor matched to the displacement of the engine offers the best alternative, providing ease of maintenance, reliabbility, and low cost.
As the engine will be operating on an incline due to the angle of the propeller shaft, it wil be necessary to provide a wedge beneath the carburetor to create a horizontal level of fuel chamber. Since the temperature of the intake mainfold is well below ignition temperature, the wedge may be fashiond from closed-grain hardwood such as maple.
In order that the carburator may have an automatic choke feature, it is only necessary to attach an electric thermostate choke element to the carburetor choke linkage.
The one remaining task task is to plug the fuel injector ports on the intake mainfold. Only two simple aluminium componentsare requierd for each of the four cylinders. When the occasion arrives to install the engine, it will be necessary to providethe following : fuel tank, tank vents, filler pipe, fuel line hose, electric fuel pump, and fuel water strainer (a fuel shutoff valve is a good option, too although not reqierd by the USCG if the carburetor conection is above the level of the fuel tank and the fuel tank and the fuel line is less than 12' in lenght). Not knowing the specifics of your craft, it is best that you order these items, all of which may be found in the many discount marine catalogs or stores.