Well I found the proof I was looking for ... from Nigel Calder's book "Marine Diesel Engines":
"A less common cause of engine flooding is the installation of a scoop-type water inlet facing forward on the outside of a sailboat hull. Anytime the boat is moving at more than a few knots, this generates pressure in the raw-water system. In normal circumstances, the vanes in the rubber impeller raw-water pump will hold this pressure at bay when the engine is not running. But if the vanes get damaged, water will be driven up through the heat exchanger and into the exhaust, where it will build up and flood the engine. Scoops, if used, should be fitted backward."
So that sucks. Going to have to talk to the yard. Based on what everybody said here, it sounds like the install will most likely work OK which is good to know. But like MaineSail and my book says, there is a chance it will not and at $82/hr they should have known better.
1980 S2 9.2A (30') in Anacortes, WA
Aux power 13hp Volvo MD7A
Last edited by FishFinder; 05-19-2009 at 11:45 PM.