Randy, here is the best I can do;
From what I understand (remember, I was 1 year old) the 1st MerCruisers were introduced in late 1961. So when did they actually become available to the boat manufacturers & to the consumer? Some time in 1962 I would assume. As for Mercury's electronic parts catalog, they show 1963 being the 1st model year and that is for a #1 drive with serial numbers of 1534572 thru 1684187. 1964 was for a #1A/1B/1C with s/n 1684188 thru 1777798. 1965 was for a #1A/1B/1C with EZ shift s/n 1776349 thru 2065189. Notice the overlap in serial numbers here. So, some were built with EZ shift & some without for a short time frame.
The differences between the drives in a nut shell; #1 used an outboard type shift spring loaded to forward gear and a 14" dia gearcase. #1A/1B/1C still used a spring loaded outboard type shift mechanism but had a larger 16" diameter gearcase still used today. #1A/1B/1C w/EZ shift used the crank type shift mechanism and shift interupter that has been in use ever since and still the 16" dia gearcase. The 1A/1B/1C designation had to do with gear ratios.
While they all looked very similar, there were differences at the bell housing to upper housing interface. 1967 is when the drive took on its most popular design that was used thru 1981. 1982 had the gearcase redesigned (designated as an "R") with squared off edges but internals were the same. 1983/1984 is when the "MR" was introduced. The MR looked just like an "R" but had the vertical driveshaft and lower gears improved. In 1985 they introduced it as the Alpha 1. Same drive, new name. The Alpha 1 was used thru 1990 then the Alpha Gen 2 came out.
Let me go back to the 1967 thru 1969 and some earlty 1970 models. They had a square prop shaft shoulder for the thrust hub & a different lower bearing carrier. Also, course threads for the prop nut. Later 1970 models used a tapered shoulder & fine threads. There were subtle differences internally from 1967 thru 1981 but in theory, the drives were interchangeable & WOULD bolt right on & work. I can tell you that there were some mid '70s drives with some type of junk alloy shift shafts used for a few years.
To answer your question about shaft materials (I assume rusting), 1967 and later with the exception of the above mentioned few years of junk shift shafts had no issues. Earlier years did.
Water pump impellers are available. As for entire gasket/seal kits, I believe that you will be OK there too. Bigger issue is the engine parts like hoses & manifolds. These were a breed all their own until 1967. 1967 & later you are OK.
As for the 2 sets of cylinders on the drive; The short ones are shock cylinders to absorb any impact. The long ones if there are for power TILT, not TRIM. TRIM became available in 1967 as on option and standard in 1968. TILT cylinders have one hose running to them, TRIM cylinders have 2 hoses running to them. The shock cylinders went away in 1967.
I have never worked on a #1 (14" diameter drive) I have worked on a few 1A/1B/1C w/EZ shift and lots of 1967 and newer.
Jim