Cooling loop schematic for earlier engines (e.g., M-25/XP/XPA)
The yellow arrows below indicate the hose barbs (on the top of the coolant pump and bottom of the thermostat housing) where the OEM Kubota engine had the "OEM Thermostat Bypass Hose." This connection provided a small, constant flow through the engine block (even when the TStat is closed while the engine coolant warms to operating temperature.) The purpose is to prevent hot spots in the engine block that could damage gaskets and seals or warp the head. Once the thermostat opens, the bypass becomes a redundant coolant flow path. Catalina (and other boat manufacturers) removes that bypass and connects the domestic water heater hoses -- thereby just creating a much longer flow path that bypasses the TStat and protects against hot spots. The benefit of doing this is that the domestic water heats up FAST because it doesn't depend on waiting until the TStat. Water will heat while idling, which was nearly impossible when (in other earlier models) the water heater was plumbed in series with the heat exchanger.
Coolant flow on the B-series engines (M-35B shown)
--KWKloeber 2 February 2019