Hunter never used the Atomic Four, having always had a strong relationship with Mack Boring in Union NJ, the foremost Yanmar diesel distributor on the East Coast.
I have heard of people taking out the trouble-prone (and parts-destitute) Renault 7/8-hp diesel in a Hunter 27 and going to an outboard. I think this is nuts. After a certain point (and I am saying that's 25 or 26 ft for a fin-keeled boat) the outboard ceases to be a convenience and starts becoming a downright liability. On my H25 two guys cannot go forward to pull down sails under power without hearing the ominous 'wawwOWWW, wawwOWWW' of the cavitation plate getting too near the surface. Keeping a supply of backup wrist pins on board is of little comfort in Barnegat inlet.
I would recommend a sail drive (see Volvo, Yanni Diesel, Westerbeke or even some of the gas engines). This can even be installed off-center to avoid the skeg like my boat has. If I had known about the simple gas-powered sail drive options I might have considered one for Diana (before remodeling the galley an under-cockpit area so that now I can't). Having an inboard, whenever possible, even on a pretty small boat (the 23-ft Stone Horse had one; so did the 20-ft Flicka), has all sorts of benefits. Herreshoff would have said, who needs it, it adds 'stink' and noise and complexity, etc.; but I say it adds cabin heat for cold weather, power generation for battery charging, and a power source for refrigeration, and all of that comes with much less hassle and cost by having the inboard than by some other way.
As for sailing characteristics, the absolute rule of thumb is to keep weight towards the center and away from the ends. Enough said there-- the outboard is a plain liability for handling even when it's turned off. And for when it's turned on-- all of us who have tried to reverse a sailboat into a slip in a crosswind when the outboard is aft of the rudder will agree wholeheartedly with me by now too.