I'm told (by a marine mechanic), the fear of these jacketed cooling system is the eventual catastrophic failure as the inner dry exhaust pipe corrodes and raw water flows in - undetected - from the outer, larger diameter pipe jacket that carries the cooling water through the system. When that happens, raw water finds it's way into the exhaust ports on the engine soon destroying it.
Some of these jacketed systems were noisy but when designed with a water injected muffler like this one, they're a very quiet marine exhaust.
They still make jacketed pipe exhaust systems but you'll only see them used if a situation exists where it's too difficult to design a more typical (today), raw water cooled exhaust. Mine was fitted to a Graymarine gas engine originally. When a larger sized diesel was added, the installers simply raised the old system a few inches to the higher exhaust manifold, and reconnected.
I took a sawzall to it yesterday. I was expecting the new blade go through quickly. The outer jacket and the inner pipe were solid. The inner exhaust pipe was bone dry and both pipes were very thick. Little expense was spared in the work and materials of this 1961 exhaust. I felt regret immediately but there was no sure way for me to test the inner pipe. I still have the remaining high goose neck aft and the water injected cast iron muffler to remove (once I cut an access through a plywood bulkhead under the aft deck).
The good news is I'm removing a lot of weight from the boat! This stuff is heavy. Probably worth scrap value? The jacketed pipe looks like copper. The first dry section before the flexible bellows link, appears to be bronze pipe. I just removed a century exhaust pipe after only 50 years wear...