Welcome, RJ! There’s some really decent, helpful folks here, so you’re in the right place. I’ll offer my 2₵ on your issues, but *Disclaimer* there are others with infinitely more 2-stroke Merc experience. If you have time to read my posts, I detailed my trials and tribulations with my 175 SportJet. First, Seafoam can be a miracle cure - I have personal experience with about 10 engines that were immensely helped by it. No wonder yours ran slightly better afterward, but my observation is that while 5000 rpm maybe near the WOT spec (I’m guessing), the video showed very little jet-wash. (BTW, the video was a GREAT idea.)
As they say – with jets, too low engine rpm @ WOT indicates engine problems, too high rpm @ WOT indicates impeller/wear ring problems. I think you have a combination of both; I think the impeller/wear ring clearance is allowing the motor to rev up, but producing little thrust. I think if the clearance were in spec, your engine would not get anywhere near 5000 rpm. I’d investigate the jet drive first and correct anything excessively worn, then see what your WOT rpm is.
AFA the engine - don’t rule out some knuckle-dragger previously bollixing something simple or obvious. A crossed wire, a critical adjustment, even an incorrect part installed. You’re going to have to do serious detective work and leave no stone unturned. However, in the end, you’ll have great satisfaction knowing YOU fixed it and you’ll know your boat so much better than just an “operator.” Best wishes!