yup I cut a 4" hole and added a 4" rubber grommet. A 4.5" hole will be better so the Scotty fits in there better. Get a good hole saw the metal was thicker then I thought.
I don't know what keeps it out but I've ran mine for about 5 years now and have never once sucked water in it. Scotty said he did extensive testing with water to make sure you never get any in there. Said he used high pressure water and was shooting at it from every angle and never had a problem with it.