Water in the bowl bushing area is not going to hurt anything as long as it is in the water, dominator bowls are water lubricated, the problem with water getting in to a berk bowl is that sand tends to get in with it and cant get out causing shaft wear and bushing wear to be accelerated. I would change bushings and seal at LEAST every 2 to 3 seasons and run NO heavier than 90 wt gear lube, I suggest around a 50 wt oil and no grease unless the seal has a snap ring. Undersize impellers are fine to an extent, kinda like a brake rotor ( not really) but you can get replacement WRs down to .060" under but you need to be aware of how much material is left on your particular piece and how strong it will be and if you are willing to risk your life, pump, motor and boat on it, just saying KDUB