Try this link
http://www.mercaftermarkets.com/mercury-outboard-extension-kit/
Just don't let your heart stop when you see the price ($500+) - kit includes the 5" spacer for the exhaust housing, a new driveshaft, plus the hardware to bolt everything together. There would be no vibration with this unit. But you do have to totally tear down your lower unit to install the new driveshaft (and while you are there you may as well re-do the seals etc) - so it could turn into an expensive/time consuming job.
There was an another place that made up stub shafts to go with the spacer - their name eludes me now and can't find them with a web search, but their prices were similar (but the stub went between the existing shaft and the crank, so you didn't have to crack the gearcase. Maybe check ebay etc - someone is always dumping something.
Have you considered option 3 - mount the motor on a jack plate? Yes, you are still putting a 20" shaft on a 25" transom, but with 10 or 12" of backspace you would deal with the clearance issues when tilted and with that backspacing you wouldn't even need to lose the full 5" (3 1/2" would be more in order) - plus it allows you to "tweak" the mounting height for best performance (read best gas mileage - yes, you do gain some speed, but usually just in the fractions of a mph - it's the reduced drag (saves fuel) which is the real benefit of a jack.
The best part is, a machined aluminum, adjustable plate can usually be obtained for somewhat under 200 bucks unless you want to go really fancy..