[JohnB]

I have wrenched some on a friend of mines. He has a Savage with an inboard, 1989, probably the same engine you have.
I am not an expert on diesel's but my guess is you would have to put the bigger shaft in, which would include bearings, seals, and some other stuff. Those are not cheap.
You would probably have to change the propellor and transmission, and probably modify the engine mounts, unless you bought a diesel with the same mounting footprint.
Another thing I would watch closely is the balance. That motor, and the 100 gal gas tanks sitting in the back really have that thing stern heavy. We put the livewell forward, and tried to shift some stuff, but that layout just is tail heavy. A diesel usually weighs more, and I don't think any additional weight in that boat is a good thing.
That's just my opinion.