Folks, I appreciate all the replies, but I have spent quite a bit of time using search engines and checking online marine chandleries as well as McMasterCarr, Grainger and many others. The Universal diesels use a heat exchanger with 7/8" hose connections. The hoses are Shields 250-0780 which is a wired heater hose with an ID of 7/8". It is hard to find but is available. I actually just went to the Toad Marine Supply website to look at the schematic of the heat exchanger to verify that it is 7/8" and stumbled across a Westerbeke nipple that goes from 7/8" hose to 3/4" NPT which I can easily adapt to the 1/2" I need. At $45 each they are a little spendy, but looks like this will solve the problem!
I am surprised others have not run into this issue, and given the scarcity of 7/8" ID hose, I am curious why Catalina Direct or whoever is making the new heat exchangers doesn't change the nipples to 3/4"? Looking at the Catalina Direct website, they have the pre-formed hose which is clearly labeled 7/8".