First off, when I did mine, I did not use the plugs in the holes. I used a very thin backing plate and epoxied the aluminum drill plugs back in the holes, filled with JB Weld (there it is

) sanded and painted. Looks just the same as before. Will show you how if you drill the holes.
For tools: You will need a alignment bar (e-bay), a torque wrench, pivot pin tool (they say a 1/2 inch allen wrench will work), drift for removing bottom swivel pin.
you will want to replace #4 seal and Maybe 4 & 5 bushings #21 cotter pin here:
http://www.mercruiserparts.com/Show.../2.png&inbr=1942&bnbr=70&bdesc=GIMBAL+HOUSING
On the ring #2 bushing and #17 nut here:
http://www.mercruiserparts.com/Show...&bnbr=80&bdesc=GIMBAL+RING+AND+STEERING+LEVER
You will need to replace the drive bellows, and should probably do the shift cable bellows too. Your exhaust bellows might be OK, If they look good, would reuse them (easier to get back on). While you are at it you should replace the impeller. A outdrive gasket kit for when you put it back together.
You will need some perfect seal, or NAPA (permitex) aviation sealant (if you do the impeller), bellows cement, Quicksilver spline grease and Quicksilver 2-4-c.
All I can think of for now. Good luck!