YESSS!!! The new wear ring did it! No cavitation!! The boat takes off much faster now, and has a lot more thrust in turns. Challenger 3.0! Moral of the story is: if you cheap out on a wear ring, you better return it if you don't have less than .14mm clearance (mine was .1mm) We had a blast sliding it around at full throttle with the trim up. Hardly slows down!
Now if I could only figure out why it's refracting water out of the steering nozzle. I'm starting to think there is no diameter I can bore this thing to to stop that...