In my honest opinion there is no real advantage to using a drive instead of a strut aside from the fact that it's easier to do fine-tune adjustments without losing your initial position.
What I would suggest is you modify the opening in the transom for the stuffing tube. Make it oval stretching it out to allow the strut to be moved up/down about 1/2" or so. That will allow good up/down adjustment and will also allow you to do slight angle adjustments without any drastic curves in the tube. I've done many this way.
Don't worry about water leakage into the hull. It keeps the hull low in the water if it dies...usually means less damage if it gets hit!
If that really bothers you though, you can make a flexible seal around the stuffing tube with some silicone, or if you can find a suitable size rubber bellows that will work. I've never bothered with that though. Water might come in when boat is stopped, but when it's under power it bails out by that opening.
FTR, most monos I've owned liked the propshaft centerline at about 3/8 to 1/2" above the keel and mostly flat or with just a little bit of negative (propnut end down)on the strut.
Edit: OOPS... was a bit too slow, Scott beat me to it!
He does have a good point about the square drive setup with the stinger drive... I hadn't thought of that... can you tell I use welded cables?