Re: wot
You have a lot to read and think about in all the answers to your post, but here is a real life event.
In short a newly acquired, 15 year old rig ('75 vintage 3 cyl 70 hp Evinrude) would work normally upon first operating during an outing. As the day progressed, the engine became sluggish and lacked power, getting progressively worse, till the next outing and it would repeat.
Grand finale was one day, some 6 months later, I was at WOT, roughly 40 mph and the engine siezed; I mean it stopped dead in an instant. Needless to say the boat came to a screeching halt, overrun clutch in the lower unit or no overrun clutch....almost threw me out of the boat.
Culprit was a frozen shut thermostat. Apparently this engine didn't have a pressure relief valve, I didn't see one, and if it did, it too must have been frozen shut.
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Below is a partial answer to one of your questions
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On the Pee if you are talking about exhaust ports, don't expect the same things to happen at the pressure relief exhaust ports (the holes on the exhaust housing just below the powerhead at the rear of the engine) on muffs as compared to in the water. You have no back pressure on muffs and have it while in the water....hence the reason for the critters.
On Pee from the Pee tube, if you have one and I think you do, this should be there as long as the engine is running (giving it a minute to get up there on start-up) regardless of muffs (water faucet on of course) or in the water, and the intensity of the stream is pretty much directly proportional to engine rpm. At 4-5000 rpm this should sort-of sting the palm of your hand when you put it in it, near the engine cowl.
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Below is something noone has touched upon and may have some merit in solving your problem.
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I am going to say something and you might consider it before you do a lot of other things. 70 hp on a 17' bow rider is way under powered if your engine is the newer 3 cylinder design, vs the old 6 cyl tower of power.....don't remember when merc changed designs.
Back in the early 1970's when bow riders were popular, folks in the neighborhood had 15' bow riders with 60-65 hp OMC loopers.
If you only had a couple of people and sunday's picnic goodies, a 17p prop would be adequate. If you had 2 or 3 folks and wanted one of them to ski, then a 15p prop was required and even then you had to be on 2 skiis, only one skiing at a time, and you were in the 30 +/- mph range. We had an 18' bowrider with a 125 OMC and it ran a 19p and could haul around a boat full of family and a couple of them could get off and onto slaloms with power to run comfortabley at 35 mph.
All of these engines had essentially the same size lower unit which allowed them to roll a 13" +/- diameter prop. Shallow pitch and large diameter at low rpms makes for good low end torque, the kind if torque you need to get a big boat on plane if you have a small engine............
If my memory serves me, your Merc (if the newer 70 as mentioned) runs a high speed lower unit (like 1.78:1) with a 10" prop; have no idea as to the pitch as you didn't mention it, but it's very important. These engines I mentioned ran gearboxes of 2:1 on my 125 and more like 2.3:1 on the smaller engines. Your engine is setup for fast light loads, and these were setup for pushing heavier loads, including ski loads.
Only knowing what I have observed herein, with a lot of facts missing, your problem may be that it takes WOT for your little 70 to just barely put that 17' boat on plane and as soon as you back off, the boat slows to "just under planing speed" which is the point of maximum load on an engine and the engine just shuts down from lack of torque; the water resistance on the prop exceeds the power available at the powerhead and the engine just shuts down.
A prop with a couple of inches of less pitch than you are currently running could answer a lot of questions if you could borrow one long enough to test it.
You bought the boat used I presume. I wonder what the previous owner('s) did with it/to it when they had it. Would be nice to know. I realize that at this age it may have been sold for that reason, or it could have changed hands many times for lack of performance due to under powering.
Along these lines, do you know for sure that the area below the deck is dry. Some boats back in those days put the deck in and sealed it using the trapped air between the hull and deck as a means to provide flotation without using foam. Over time the seams can/do crack and the area can fill with water. Makes a significant difference in the ability to plane out and stay on plane with a given engine, and makes steering/control of the boat somewhat awkward. BTDT Also, some boats with foam (the sprayed in kind that is not sealed) will absorb and retain moisture doing essentially the same thing. Check it out.
Best I can do man,
Mark