David has the correct definition of blow by. I guess your mechanics description is reasonable but in your case the coolant blow by is not a Sign of a warn out engine.Blow-by often refers to combustion gasses "blowing by" the piston rings into the crank case, which is a sign of engine wear, but totally unrelated to your type of coolant overpressurization "blow-by". The fact that your engine runs smoothly and performs fine other than the (hopefully resolved) overheating suggests that it still has life left in it and shouldn't need replacement.
The items on top of the cylinders with the rigid hoses are actually the injectors, not the glow plugs.
As for tightening the hose clamps - you should be able to get them reasonably tight before they fail, certainly tight enough to prevent leaking unless they're badly corroded. I usually tighten them as tight as I can before it looks like hose rubber is starting to "ooze" into the perforations. Maine Sail would point out that the perforated style clamp isn't really the greatest. Search the archives and I believe you'll find his recommended alternative.
You might want to install a coolant overflow tank so you do not suck more air into the system each time the engine cools down. But once you install the water heater correctly your burping days will be over.
Now what is this talk about ripping your cockpit out to do fiberglass work? That sounds scary .....