It's true. I had this done to my Honda 130 on my previous boat, a Bayrunner. Basically slapped a whole new upper-end on my engine. Mine was a '99 with about 600 hours.
Your motor does have to fall into a certain serial number range. I used to have some pictures of the cracking, but yeah, the water jackets start to leak and that can cause all kinds of problems. A guy I know in Hawaii was losing power in his 130 because water had leaked into the intake and basically clogged it with salt residue, suffocating the motor. A 3rd guy I know with twin 130's on a SeaCat had both his motors done shortly after mine.
You need to have the inspection procedure done by an authorized Honda dealer/shop. If they find any evidence of cracking, they call for authorization of the work under warranty. Honda ships in a new crate short block and new cylinder head, ready to go. They use all the other existing stuff on your motor, like alternator, injection system, and such.
The program is not covert. Honda sent me a Product Update Campaign letter informing me of the problem. I was the original owner, but if you bought one of these motors on a used boat, you might not know about this campaign. They also replaced the fuel pump due to corrosion issues on the '99 motors under a different campaign. I ignored the initial letter for about a year because the motor ran great, no problems. I decided to have the check for cracks done when I had the fuel pump replaced and indeed, they were there. Dealer had the boat for about three months to get all the parts and do the work.
I agree with Gato. I thought then and still do that, even though inconvenient, it was very admirable of Honda to own up to the problem and do the
right thing to fix it. Too many companies these days would rather have you take it in the ass and never own up to that kind of problem or warranty work.