Yes you can put just about anything in it. I would say stick with Mercruser as it's a little easier to get parts, but even so these older engines and drives aren't always easy to get stuff for. I'd look for a good running take out Mercruiser Alpha with a v8 chevy 305 or 350. The carb will probably be crap, so you'll want to buy a new one (forget "rebuilt" or "reconditioned" these are useless) And get all new tune up parts...cap rotor points condenser coil wires plugs. For the drive spend the coin to have a shop test it and replace impeller.
You want to replace all the rubber fuel lines as they are not compatible with ethanol fuels. Have the tank(s) cleaned out by a tank polishing service. Run new vent hoses.
None of this is particularly difficult, but you have to ask yourself if you are prepared to absorb the rather large expense of repairing the current lump or the even larger expense of converting to something else. Either way you slice it you are looking at many boat bucks (one boat buck equals 1000 normal grocery, beer or gas bucks) to get there.