Bobs low water on 40hp yamaha pointers??

Got my Bobs Machine lwp heliarced on today, now the hard part placing the hole in the lower unit housing. There is just not much room to work with between the input shaft housing and shifter housing.... The supplied 1/2 pipe fittings seem excessive. I am thinking about dropping down to a 3/8 pipe. Also it looks like there is either an oil feed or drain back to the upper bearing that I don't want to hit. So can you guys show me some pics before I drill this thing. I thought about welding a bung on the outside but there's isn't much room due to the bolt for the lower unit. My foot/motor is a 2000 model and I think it is different from the earlier style.

Thanks in advance!

no, do not change size, it fits.