I have a 1973 E-27 that came re powered with a 8.3 HP Yanmar 1GM10.
I cruise between 5.5 & 6.5 knots depending on current and head winds. I was off Point Loma in San Diego one time with about a 18 knot head wind and a 1.5 knot current. I was making only about 2 knots of head way. If I were to re power I would probably go with the two of three cylinder models. A friend of mine with a Islander 28 put in a new 3 cylinder yanmar. He paid about 8 K and it came with everything but the exhaust system. I guess other diesel manufactures just provide the engine and sell things like the heat exchangers and instrument panels separately. Also understand that you will need the create a cradle to fit the engine compartment so that you get the proper alignment.
I also noticed a ad for Yanmar, boasting that the new Columbia 30's are using the new single cylinder 9 HP 1GM10 sail drives. Not sure what the displacement of a Columbia 30 is but they say it cruises a 7 or 8 knots.
I was told that by my Yanmar Dealer, it would cost around 6 K for a new single cylinder 9 HP 1GM10. If you can afford it I would defiantly go with a Yanmar. Very reliable!
Here is the advisement on engine size from a independent Yanmar Help Web Site. Lots of good information here.
http://www.yanmarhelp.com/
Which Engine?
Rules of thumb:*Sailboat or displacement launch: one horsepower per 500 pounds ( plus/minus 50lbs ), one kilowatt per 170kg of fully loaded boat is enough to punch into an average seaway. (...ah... no! I can't define 'average seaway', use your imagination )**Planning hull: this depends on how fast you want to go, see HERE.*A planning hull with an all up weight of 10 tons wanting to cruise at 25 knots will need at least 530 horsepower, 395Kw. An 11 ton boat wanting to cruise at 25 knots will need 580 horsepower or 432Kw.*Remember that more engines equal more weight and the extra drive train weight also needs to be taken into account.*You also need to factor in those extra girlfriends, dogs, beer and ice for the summer cruise.