First of all, my Kia Sorento with state of the art 170 HP 2.5ltr common rail turbo diesel gets only red diesel and never complains. There are a lot of fairy tales circulating about sludge, sulphur and emulsified water in red diesel, but it is just diesel with trace amounts of a cyclic hydrocarbon combustible dye added to catch you evading taxes. The nasty stuff I just mentioned is also present in the high tax diesel, that's why car manufacurers cut their profits by installing filters and water seperators. Without these, there would be a warranty claim for every car sold.
About marinizing, there are also many fairytales. While wrestling with my 2 VW engines I read as much as I can about the subject or as much as my heart rate can handle.
Do not look at the large companies like Mercruiser to see how it is done. Their aim is buy cheap, sell expensive. Look at the GM Vortex product line to see where they come from. They reluctantly increase their standards now, but still sell a 1947 GM designed museum piece with an embarrasing valve lifting mechanism and a carburettor that is pouring your high tax gasoline away as if it were for free.
Feeding seawater in your engine's cooling jacket is not a good idea, not with an aluminium head gasket nor with a golden one. The company I will not mention again because it isn't the only one uses a thermostat that is already wide open when it should still be firmly closed. As a result, the engine temperature is way to cold to allow full combustion. The coolant temperate should be near boiling point but if you do that with raw water cooling even an oldfashioned greycast engine is eaten away while you look at it.
I've used up 1 Volvo Penta, 1 OMC and 4 of these black ones; believe me, a thermostat in seawater is asking for trouble. Immediately when the warranty period is over, it either stays closed or remains open. Marine growth does that.
Look at www.mesamarine.com
to find out for which engines a water cooled exhaust and heat exchanger are available. There may be other sites as well, but in my humble opinion they are the prime source for both US and foreign car engines.
You will notice that the choice is limited, but dig a little deeper. My VW-150 manifolds were marked for 1,5 ltr engines, diesel or gasoline, but engine manufacturers tend to use the same hardware in several generations, so they are a perfect fit for 1.9TD's as well. A car mechanic knows more about that than I do.
Use a modern, lightweight diesel if you can find one and can afford it. Operating temp. is reached quicker, saving fuel and polluting less. And all the lbs. you don't have to carry around will save fuel every mile and gets you into plane faster.
Unless your application is a real workhorse with a 6 digit hours counter, engine life is no issue. Passenger car engines live very, very long, even in the average passenger car. Being in a boat is like a holiday for 'em: clean air, perfect cooling, steady rpm and -with the right props- no overload from hill climbing.
B.t.w. you do not need the amount of horses commercial marine engines are rated with: these are commercial horses. A diesel with about half that, but real shaft HP will be more than enough. You may loose a few knots at WOT but than again, your diesel has no throttle at all and you started out with mentioning red diesel so you don't want to waste money....
Your bargain diesel will not need a marine starter motor and no marine alternator. First of all the only difference between a car starter and a marine one is the price (3 times, sometimes more) and maybe a metal band around the area where the brushes are, but most starters I've seen in cars already have that. A marine alternator is different from a modern lightweight one because it invariably is an oldfashioned Motorola or Lucas with a steel casing and a sintered copper filter at the rear cover. The side where the fan is doesn't seem to need that. But you do not need it at all, your diesel fumes won't ignite, they just smell.
What you also don't need are marine relays. From my own experience and the many summer guests looking for help, I can testify that they are the cause of nearly all electrical problems in a sterndrive's engine bay. Relays you do need because some actions like glowing or starting need a lot of current, but car relays (perhaps not aftermarket ones) are just as good or better and certainly cheaper.
From the car engine's air filter, keep the housing and the wire mesh from the filter cartridge. Boat engines gets clean air that needs no filtering; the mesh will keep animals from building nests in the intake manifold.
There are of course mechanical issues like making engine mounts (those from the car absolutely never fit), adapter plates for your marine gearbox, the engine coupler and the bracket you'll need for a raw water pump, but that's just a lot of cutting, drilling, bending and welding. You'll need a good friend or do it yourself. The only real problem I spent a lot of internet hours on was finding the right coolant hoses because in a car there is normally no plumbing at the exhaust manifold side, so you must improvise a bit. No big deal for a car mechanic I suppose. And of course the diameters from marinizing parts and car parts do not match, but adapters are quickly bought or made.
I may have overlooked something, so keep reading what others will add.