You should get a borescope (camera) and check cylinder with 65# pressure to see if there are gouges in it. If so then block will need bored out if specs allow it. May no be worth it, especially if you need outdrive also, then you have to consider "project creep". I know those 3.7s had problems with generator/alternators that were located on tip of crankshaft, and were prone to magnets coming loose and causes havoc. They need to be changed out for modern alternator. Also the water pumps were prone to start leaking after a while, and they were located on tip of camshaft, and actually would wear a groove in camshaft ends causes water to enter engine mixing with oil and causing damage. There used to be a kit available to place a sleeve over end of camshaft correcting this issue. If your block has many hours on it, plan on fixing those issues when you do engine work. You're sure to run into more issues once you pull engine and take it apart. You would probably be better off finding a more modern engine/outdrive and swap everything out. If you have room in engine compartment a good 4.3 setup would be a nice upgrade, and there are usually good used ones available if you look around. May have to change mounts around to accommodate this change though, but maybe not, and 4.3 will be a better setup for the Seafarer. If cylinders look good and you want to just do a ring change, those blocks were like half of a Ford 460 block and use the pistons, rings, etc from it. You could get a inexpensive cylinder hone tool ($20-30) and clean-up cylinder surfaces, and install new rings and bearings. Lot of work, and not sure if parts are still available, but the 3.7s were good engines when all is right. You have to decide if what is best for you.