Just a suggestion from a satisfied customer ... If you really like your boat and think that it will be yours in the long term, I think you might be happiest if you decide to bite the bullet and go thru the expense of installing a new engine. (What's not to like about a Catalina 27, which has faced the test of time and comes out as one of the most popular boats ever).
I have a very similar boat, which was slightly underpowered with a Yanmar 1GM. I put in a new 2YM15 and couldn't be happier. I did some comparison to see if the 2YM15 is a feasible option for you.
They appear to have the same prop rotation. The Yanmar engine may be lighter depending on whether or not the engine weights include transmission (I didn't research in detail). The width and length of Yanmar is less in both dimensions (approx 1" - 2" less). Only the height is about 2" higher, but if clearance is a problem, an alternate mixing elbow is a feasible solution.
Of course, much depends on the stringer set-up. I was fortunate that I didn't have to modify the mounting stringers. I did have to push my cabinet face out 2-inches into the cabin. Any modification for the mounting shouldn't be too difficult, though.
I worked with the installer to do a lot of the grunt work to minimize installation cost.
The benefits you will find include: more HP, far more power and better speed thru water; fresh-water cooled (instead of raw water) with heat exchanger; 80-amp alternator is std; and, piece of mind knowing that you have a reliable engine. I don't think I would explore much of the area you are at (what with the tidal currents, shipping traffic, fog, etc.) without having confidence in the engine. I'm sure others have more confidence in repaired or rebuilt engines ... I simply don't (well a re-built engine with a warranty might help). That's the basis for my suggestion.
BTW, petersea, thanks for that link. Once I tinker with my old engine in the basement and find out what needs to be repaired ... it's a running engine but needs repairs ... I'll be looking for a place to sell it.