That is partially correct yes, the most that ESC can handle is 3s so use 3s. The ESC doesn't mention anything about having a low voltage cutoff, and if you run too long and flatten a LiPo battery it will puff up becoming ruined and a fire risk, so i would advise buying a separate LiPo alarm for it, plug it into the balance port and it will beep to let you know when to bring it in before it puffs up.
The higher your mAh rating, the longer the boat's runtime will be, what mAh you want is personal choice. LiPos are lighter than NiMh for the same mAh, but you want 2 opposing benefits from the change, what is more important to you, runtime or weight reduction, if it is weight get a 6000mAh pack that will give you almost the same runtime as your existing 7Ah (7000mAh) NiMh pack at much lighter weight, or as LiPos are about half the weight per mAh you could fit 2x 6000mAh packs wired in parallel for 12Ah, and nearly double your current runtime but only save a little bit of weight.
Generally for the fast boats that this site specializes in we would recommend a pack with a high C rating, but you only have a 25A motor and ESC and to avoid scaring the fish your cruising speed will probably be under 10A (worst case 25A / 6Ah is still <5C load) I would go for a low C rated pack (20C is still overkill for you, but the lowest common rating these days) as they tend to be lighter and and often cheaper for the same capacity. There is not a massive amount to be gained here however, so if you have any fast RC toys that could fit the battery in, I would compromise this and buy a higher C pack so you can use it in that too.
Paul Upton-Taylor, Greased Weasel Racing.
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