Druid 1" to 400 RPM is not the rule of thumb for sailboat props. The generally accepted rule of thumb is 1" to 200 RPM but then even that is rarely spot on.
Depends on who you talk to! taking an inch out of a 17-pitch powerboat prop is WAY different than taking an inch out of an 8-pitch sailboat prop! As you pointed out, there's more HP at higher RPM, so there's a "positive feedback" thing going on that adds to the rpms.
Also Gary is 700 RPM off not 500RPM..
First, most engines (like mine) that talk of 3600rpm "max" are 3400 continuous. Even the website you quote say it should be "within 200 rpm", so 3400 is fine.
I would disagree with the assumption that "all boats are over propped so it's okay" thinking.
First, it was not my intention to say that just because most boats are overpropped that "that's ok".
Second, yes, I have heard from many dealers who say you MUST be within a few RPM of max, although the guy I bought my Universal from (who'd forgotten more about Atomics and Universals than I'll ever know!) said a few hundred RPM low is fine, as long as you're not smoking or overheating. And I ran my Universal (Kubuta, same as a Beta) 500 rpm low for over 10 years with no ill effects.
As you infer about sooty transoms, the Clue is whether or not it's smoking or overheating. If not, not a big concern (although as you point out he's not getting the most out of his engine)
Bottom line: all the theory in the world is just that: Theory. The ONLY way to ensure the correct prop is to put it on and test it!
And Woody: a three-blade has less slip than a two-blade (also higher-diameter props have less slip than smaller ones). This is the "magic number" about prop calcs: how much does it slip? Slip is basically the difference between how fast you actually go through the water and the theoretical speed you would go based on prop pitch and RPM (Pitch is how far it goes through the water in one revolution, theoretically). Bigger prop or more blades or more efficient blades mean more "grip" and less slip.
Make sense?
druid