I thought it would run a lot faster than that, seeing as the boat only weighs a couple hundred pounds and the motor is under 300.
Why do you suggest a low pitch prop? I've done a little reading online about different props and I was under the impression that a lower pitch is better for pulling power (heavier boats), and a high pitch prop (23 or so) is good for lightweight boats and gives you a higher top speed.
Is it something to do with the shape or design of the boat that makes it different for tunnels?

Either way, I may take your advice on getting a bigger motor. The original owner supposedly had a 125hp on it, so maybe I'll push it a little and try to find a 150 eventually. First I need to get it sealed and painted though.

Another thing I noticed on the boat is that there are steel cables coming from the steering wheel shaft and running back through pulleys. Do you think I would be able to eliminate those and just use the standard steering cable that's on the Merc?

I looked up some pictures of LeeCraft and Molinari tunnels and my boat definitely looks more like the Molinari's but not identical.