How are the water intakes? Good and clear? If you haven't, take the grates off and flush them out.
I'd think if there was a blockage the vanes would just deflect and bypass, not destroy themselves.
You running the engine on muffs or in a barrel?
The only reason you should lube the impeller is to ease installation, it will not burn up if you don't, they're designed to be lubed only by water. I've never lubed one and have no issues.
Might be a good idea to drop the lower unit in a bucket and spin the driveshaft with a drill, see what it does. If it pumps good without an issue, you know the problem is in the power head.
With the lower unit off, you can put compressed air through either the water tube or the pee hole, but to really flush it out good you may have to remove the thermostat.