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I am planning to replace my risers this winter since they were replaced in spring of 2018. The ones on my engines now are stamped "MC-20-72963" as were the previous risers which these replaced. I have freshwater cooled log manifolds. This part number is listed as having a 3" outlet, but the elbows which the the risers feed are 3 1/2". The yard used a 3 1/2' hose to connect the risers to the elbows with a short length of 3" exhaust hose to inside of the larger hose to make it seal properly to the riser.

Is it normal to be using a larger diameter for the elbow like this? The elbows and "y"-pipes are steel do not look like they were replaced recently.

Should I be using risers with a 3 1/2" outlet?

sometimes the 3-1/2" OD is 3"ID in reality. I am not saying that is the case here but just food for thought. Using a small pc of hose as a "bushing" is done sometimes...I dont know if it "up to code" or good on a survey but it does get done and have done it myself and had no problem running for hundreds of hours.
Also regarding the exhaust system as long as the sizes are increasing towards the rear all is OK.... 3" then increasing to 3-1/2 " and bigger as you get to the rear of the boat is always OK. The reverse of that is not good practice (as far as I know but I dont have a college degree)

What's the hp rating?

330, I think. The boat is a 1978. It has log manifolds. Intake ports are oval shaped if that makes a difference.

The previous owner put in long blocks in 2013, reusing as much of external parts as he could.