So I took the leap and..... Success!
I removed 3" from the transom and the boat performed great on the test run. I hit 23kt with two people and gear in the boat while running in chop. I went for a quick run on my own in a little cleaner water and hit 26kt. I need a new prop and I know these numbers will get better once installed.
I did not experience any issues with water getting close to coming over the transom. I was being really careful due to just having the raw wood covered with tape for testing. I will test further once transom is sealed back up.
Here are some pictures of the cutting process. I will follow up with some finalized pictures after I finish up the work and get it all finished and resealed.
We removed the hardware that would get in the way of the cut and masked off the area we were cutting to protect the finish around the cut. The straight cuts were made with a circular saw
After the straight cuts were done, I followed up the corned cuts with a jigsaw
The end product before mounting any hardware
Old holes filled and hardware re-installed
View from the front
A bad picture of the rear with the motor mounted in its new location. (I will get some better pics when everything is finalized.)