Hi Gerald, this one has been ticking over in my mind for a while, sorry to have been a bit slow to click.
I suspect that it could work, but perhaps not so much by that change from steam to the power cylinder to water. 100% water would most likely lock up the steam cylinder.
However, in the boiler, the surface is not a nice clear interface like a cup of water on the table, more like a wild turbulent bubble bath with no easily definable liquid surface.
With low level in the boiler, the power cylinder gets reasonably dry steam as you expect. As the level gets high, the steam entrains more and more water, so the cylinder receives very wet steam, but still steam so it does not lock up, which obviously comes out the pump exhaust, which I suggest should go into a feed water tank and vent from that. Eventually the water loss through the pump cylinder balances the water in, with steam consumption so the boiler does not over fill. But just what the level would be compared with that steam bush is anyone's guess, especially in a boat on rough water. Probably need the bush on the boat centreline as well as at the required height.
I would suggest a test setup on a bench to check it out before a lot of work installing it in a model, but it might just work. A sort of bypass valve that accidentally controls the level. I like the concept. Just need to prove the practice, to see if there are any traps for the unwary.
MJM460