Just some pure specualtion follows
We now know the engine is 30+ years old.
Assume engine has been used lightly for most of the time, especially as a Contessa 25 probably needs only say 6 hp to reach hull speed
in calm waters like Lake Macquarie.
Plenty of carbon build up over the years masking the wearing of rings / bore.
Recently run a WOT for an hour or so has broken up / burnt the carbon thus now seeing the true effect of worn rings.
Perhaps a blown gasket to boot.
If this is what happened then one possible cheap
solution is take head off to check head gasket, do the sailorchic endorsed quick and dirty ring check and providing the oil isn't gushing though the rings, reassembled and use a slightly heavier grade of oil , say SAE 40.
Keep running lightly, keep the oil up, maybe toss in a can of "magic instant rebuild/smoke stopper", and allow more carbon to build up to help seal the worn bore.
Cold starting might b e an issue but it doesn't get that cold at Lake Macquarie and even that can be overcome by external heating
if necessary. One advantage of the 2GM
over the 2GM20 is that the 2GM
has a slightly heavier flywheel which should aid cold starting when used in conjunction the decompression levers.