I tend to vary between hoping that a potential problem is really no problem at all, and fearing the worst. This year my exhaust has been showing a little smoke or steam. I rationalized that it was just vapor on cool days, or hot exhaust. I also feared that it was oil or fuel and that my 43 year old engine needed serious repair. Last week as I put her at the winter dock, my boat neighbor observed the steam (now seen even at idle). He also asked about the small amount of water coming out. Sure enough, I realized that as the steam increased, the water, which used to splash out, now only sprinkled. The thermostat remained normal. A joint examination of the engine room revealed no obvious answer, but there was water on the sole. A leak for sure. Today I removed the leaking hose, resolved to examine the rest of the sytem and relace any suspect hoses.
Based upon your description, to me it sounds as if the raw-water feed line is obstructed although it could be the heat exchanger or the water injection nozzle. In any case, I find it hard to understand why the engine would not have over heated. Perhaps you were just lucky. If the impeller has shed a vane or two, while it might still pump enough water to cool the engine, if the vanes were sitting in the raw-water feed line, obstructing the flow, you could have the symptoms you describe--including the leakage as the obstructed flow would result in pressure build-up in hoses that are not normally so pressurized.
If, like many 4-107's, your raw-water pump feeds the heat exchanger through an anti-siphon valve; and, if your impeller is shy a vane or two, they, or their parts, may be obstructing the valve or have gotten into the input side of the heat exchanger. Your task will be to recover all of the parts although back-flushing is not particularly difficult.
For what it's worth, I have found that replacing the raw-water impeller at the earlier of 100 hours or 12 months a wise precaution.