"Andy, lot's of smoke on a
"Andy, lot's of smoke on a four stroke usually means bad piston rings. On a two stroke it could be something as simple as too much oil in the gas or even a carb running a little too rich.
It is possible that you have some stuck reeds - it would explain the lack of power in the upper end, but reed problems are not overly common and it is typical that you will end up with a plugged up carb(s) long before the reeds stick on you.
Systematic troubleshooting is always the key and a decent manual always helps.
Your motor is a 1989 model, which makes it still relatively young. Alot of Mariners were made entirely by Yamaha, yours was a Mercury version. That means the powerhead and gears are Yamaha, but the ignition and carbs were standard Merc.
All in all these were very well built motors. Yours probably predates the oil injected models, but may have initially had an auto-blend system. If it is present that could well be the cause of your "blue smoke".
If it has been removed and you are mixing your gas you can use regular unleaded mixed at 50:1 with any TCW-3 rated Marine 2 cycle oil. I'm not particularly brand loyal and have used everything from Merc branded to Walmart's no name with good results..."