The generator in our boat had the exhaust 'under water' at the stern. You couldn't hear the generator noise at all, just the bubbling of water. I'd drive around the boat in the dingy at about 50 feet, shut the outboard off and listen to see how noisy it could be to our closest neighbor. Standing next to it isn't a good test. Give it a little distance and see if it's loud enough to annoy anyone.

I was always concerned with the exhaust being below water line but it made the generator much quieter than an above water exhaust and never gave any problems in 12 years of full time cruising. Although it was pretty loud below decks, at 50' the wind had to be blowing directly at another boat in the anchorage in order to hear it. The blub blub blub it made was a much nicer sound than an engine sound.