The outboard's back from the shop (Ward's Marine, Kingston, ON) and the lower gear unit is in pieces. Unfortunately, the damage is worse than we had hoped, and rebuilding with new parts would not be economical. Here's the story of what happened, as told by the shredded innards of the gear set.
It begins with this little fellow:
Well, not that exact one; the oil plug that's at fault is now on the bottom of a Northern Ontario lake.
The gear oil floated away and was replaced by lake water. We did not notice this. The clutch dog cradle seized to the clutch dog and disintegrated:
Some of the pieces of the cradle got sucked into the gears, where they started tearing teeth apart.
The vertical driveshaft pinion took a bit more of a beating than some of the other components.
The reverse gear sustained some damage, but is in remarkably good shape considering what it just went through.
We must now decide what to do. Having the unit professionally rebuilt with all new parts would be over $1400; a complete used lower unit (if one can be found) might be half that. We'll see what we can find. In any case, the August boating season appears to be a write-off, at least as far as Sunset Chaser is concerned.
The good news? Ward's Marine did a quick, efficient job of the tear-down and charged only $17 for the diagnosis. I think I might use them again.