I can't speak from experience on the lines themselves but I trust Danny's input, and i'm not saying they are doomed, I have a buddy with a xl1200 and a raider that have been abused for years w/o failure.
Just throwing out some input.... I ride a LOT more than I wrench (clumsy fingers) so i'm not that experienced on the mechanical end of things, especially with Yamaha, much more familiar with the SD product line when it comes to common issues.
Actually, i'm impressed that you've gotten this far with the machine considering the water, and the fact that you really don't know how long it was in there... which leads me to my next opinion... (just an opinion, don't flame me)
Given the fact that you DID have that much water in there, the argument could be made that this engine is doomed, now don't get me wrong, it might give you another 200 hours of trouble free running, but I'm always concerned when a machine experiences what I'd consider heavy/long term water ingestion. I'd feel differently if this all happened on a Random Friday and you did all the steps above on Saturday/Sunday.
I also don't generally advocate that someone pass a potential problem along to the "next" guy in line. But its worth stirring that idea around in the back of your brain. If you get it out for a successful water run, solve the title/lein issues and have a ski/trailer that is as clean as you described, you might find you can get a solid price on this. The upside is that you remove a potential time bomb from your fleet, and get a nice $2,500 return on a $400 investment. The downside is that you'd have to start over in your search for a replacement and you might (probably wont) not get nearly as lucky, especially knowing that a lot of sellers might be passing along their "troubled" ski's to you, the unsuspecting buyer.
If nothing else just keep in mind that this situation may contribute to or cause failure in the near/short term and be mentally prepared (you seem to be in the right mind and understand this) for a potential crank failure. From what I recall the 1200's are not prone to blowing out cases like say the 951's for example, and if it turns out to be just that, it won't be a big $ deal, and since if that happens the pipe will come out and you can clean the carb's, do a cat block, so there are some positives.
curiously, did you suck out the water through the reeds as was suggested a few posts back ?