Now that we have some info to go on that's a start.
Since the dealer asked you to bring the boat in that's a clue that something is not right and it's not unlikely that something is wrong with the motor. It may not be producing 60 hp.
I wouldn't contemplate any changes until the dealer finishes inspecting and completing whatever repairs are needed. After that take it out on a lake, check the rpms on step, and you'll have a baseline to determine if a prop change is necessary and how much of change is needed ... if any.
A 60hp motor on 16' boat is like peas and carrots. They go together very well and the factory prop, if it's the correct one, should be in the ballpark. If a change is needed it should be relatively minor. My disagreement with MCH was his suggestion that "at least four inches of pitch possibly six inches" are needed. A six inch reduction in pitch is a 50% reduction from what you have now. That's an extremely radical change and IMO is way beyond what might be needed. MCH might have jumped the gun with his first suggestion but I have no doubt, that with the right info, that he could recommend the optimal prop.
The props you mentioned go from eight inches of pitch to twelve. That covers the spectrum of everything from pontoon boats, which are very heavy, to a 14' runabout which is very light. IMHO, your boat would fall in middle and lean slightly towards the lighter end. The small change of only one pitch down and a half inch larger in diameter is in the ballpark and typical.
With that said until you measure the rpm on step it would be difficult for someone to recommend the optimal propeller. The exception would be if someone has intimate knowledge of the same boat/motor combo and Smokercraft, Mercury, and your POS dealer have all stated the prop is correct for your application. It may not be the optimal prop but you shouldn't have to vary too far, if needed, from what it is.
I lived in Anchorage for 14 years and a very popular style of boat was a 16' to 18' aluminum hull with a 35 hp motor. The reason for the 35 was the lower Kenai was restricted to 35 hp or less. I'm very familiar with boats of this type and what they're capable of. I owned two Kenai River legal boats and many of my friends had Kenai legal boats.
I can assure you that a 60 hp motor on 16' aluminum boat is more than enough to carry three people, 20 gallons of fuel, 25 gallons of water in the live well, and get on step. A typical Kenai river guide boat with a 35 would get on step with five or six people on board with no problem.
My suggestion for a hydrafoil was based on my experience with these types of boats. As long as they're properly mounted and you don't run over logs or hit submerged objects they won't all by themselves damage the cavitation plate. I've never heard anyone suggest a hydrafoil on relatively low hp boat that operates at modest speeds is any way dangerous. Could be, but I'm not aware of it.
I've had nothing but positive experiences with hyarafoils on smallish boats. It's a low cost alternative to trim tabs and it will the keep the bow down when coming out of the hole. Worst case, if you feel that it doesn't perform like you want, take it off, and go from there. You'll have a few holes drilled in the cavition plate but that's no big deal. Trim tabs might be your cookie. I'd even suggest asking Smokercraft about their recommendations to cure the bow up on take off.
Like I said I'm not an expert on boat propellers but my first career was in aviation and in particular overhauling aircraft propellers. The last six years I served as the Chief Inspector for an FAA Certified Aircraft Propeller Repair Station. Granted, boat props and aircraft props are two entirely different animals but the basics still apply and I have very good understanding of what pitch is.
Once you get things squared away with the dealer and if you feel a prop change is warranted then contact an expert. MCH seems like a good man and I'm sure he'd be able to help you out.
He posted his contact info in his first post on the fire and offered to help anyone with prop questions. He's at The Prop Shop in Knoxville 865-693-0071.
That's ^^^ a long post.
Hopefully there's some good advice in there somewhere.