The 3.5hp ought to be enough for lake sailing. Where it would struggle would be against strong headwinds, because more HP can push through aerodynamic drag. People talk about "Will this motor push through strong currents?" The fact is, your motor cannot push you very much faster than the hull speed. More application of power only nets very small increases in speed over ground. Most of the additional power generates a taller bow and stern wave, eventually leading to bad handling. A wave's speed through water is dependent on the wavelength. Longer wavelength, faster wave. So, the wave form that a displacement hull creates can only be as long as the waterline length of the boat. Thus, more power applied cannot make the boat generate a longer or faster wave, and thus the wave just gets higher (amplitude. The energy has to go somewhere.) So, if your boat has a hull speed of roughly 5.5 knots, you will not be able to buck a 6 knot current no matter how much power you apply, because even standing still SOG, the boat hull and wave form sees 6 knot speed through water from the current.
All that being said, even with 20 knot (ish) winds on the nose, my 192 has made good headway at roughly 1/2 throttle of my 5hp 4 stroke Nissan with no current.