A leak there does a couple of things:
- Presents a hazard to your engine should the hull get flooded. Leaky exhaust out means water can leak in.....but this really is only a problem if you fill up the boat with water.
Changed the backpressure to the engine. Free flowing exhaust is important. But the stock engine is expecting some degree of restriction from the pipe. This may cause various tuning issues.
Exhaust fumes in the hull can suffocate the engine - not enough fresh air for proper combustion. And worse yet, it is possible that you have a dangerous accumulation of fumes that is really a fire hazard.
So yeah, a leak there isn't good. It's worth fixing while you are digging around in there.
So not that I've been thinking out loud - try riding without the seat on. If the exhaust leak is smothering out the engine, removing the seat should eliminate the problem.