Repowered an O/I 41 several years ago with a Perkins-Sabre (Caterpillar)
M-65 that was essentally a drop in job.... Last ditch pricey alternative?
As far as the 4-107 goes, might be rebuildable as long as the internal castings (ie: crank and rods) are in ok shape. Cranks are hard to get if yours does not have enough "meat" left to be ground. I wouldn't spend the cost of a rebuild without grinding the crank and going with oversize bearings on the rods. TAD (Trans-Atlantic-Diesel) bought up most dealers New-Old-Stock when
Perkins quit manufacturing castings. Rings,
seals, bearings, etc are available all over.
With the number of tuna boats in
Panama (Panama City side) I would imagine you might be able to pick up a 4-108 (rebuildable)
cheap. Advantages to 4-108 are dry sleeve instead of wet-sleeve (good chance thats where your water in the crankcase came from. If the o-rings on the 4-107 sleeves leak AT-ALL, instant milkshake)
parts are more easily available and most of your external
parts (starter, transmission, manifolds, etc) from your 4-107 are interchangeable.
As far as the
gear goes, the Borg-Warner mentioned above looks like this

If it is more "boxy" than round, probably the Paragon. Velvet Drive is hydraulic
gear and uses ATF rather than gear lube. Seperate
oil cooler, which means if gear was working well up till now, it will
work on the rebuilt block without tearing it down. In my experience while a non-shop rebuild of the B-W is possible, disk clearances and tolerances are critical, so unless required, I would leave it alone (assuming you do in fact have the B-W rather than the Paragon) The 4-107 I pulled from the O-I 41 did in fact have the B-W velvet drive.
Headed back to Bocas myself, but taking the long way around.... Hope you are long gone before I get there. Good luck, and have another Seco con Leche at the Wreck
Deck...