As far as I know it is called an overboard indicator. (I'm not mocking you) I am just saying it is an indicator. Its just to help let you know your pump is still functioning or if its getting ready to possibly fail. The question is how much sand is really going to travel up into the passages and cause a problem down the road. Its most likely in my opinion going to accumulate in the head cover plate area and other low lying areas that the water can allow the sand to eddy in. Meaning the majority of the sand if sucked in is going to stay in the block. Where I don't know. It has to do with specific gravity and physics. It will destroy your water pump. Widening the hole though if you choose to do so should not effect the performance of the engine or water pump pressure as the pump is before it and will maintain the pressure at that given spot regardless of how big the water indicator hole is. It is small to help project the stream and only help show that water is circulating. Most places where the water indicator is located on engines that I have seen is to high for the sand to most likely come out anyway. The sand would accumulate below it. It won't be until its blocked that you notice. Widening the hole will reduce how much big the stream is, how far it will travel and the amount of volume that will come out. Basically it may go to a dribble instead of a stream. There is not much water pressure at idle. Mine gets above 20psi or so at WOT. I run a water pressure gauge on mine as well as the overboard indicator to help monitor things. But that's me.
