I can't help you much on the engineering part of your question..

However, I can tell you what I have used with some success for a tow/water
gen. My generator is a permanent mag. DC (computer tape drive)motor.

The propeller is a small outboard prop. I would guess it's between 5-8 hp..
It is mounted on the end of a chunk of 3/4"x 24" stainless round stock. On
the other end I have welded ring to shackle the tow line to. Actually I
ended up splicing the line, without thimble to reduce fouling in sea weed,
etc.

To be honest, it's been a few years since I last used it (Baja '89 trip) I
don't remember what type of line I ended up using since they all seemed to
twist up, but eventually they became taught enough that it couldn't twist
any more and turned the generator.

I tried putting the prop on frontwards and backwards and never really
noticed any difference. I'm sure they would be if you could compare in ideal
conditions, but..

I think the ideal prop would be like the ones used on the Walker Taff Rail
Logs. I have a pair with mine but wouldn't want to risk using them on the
tow gen. These have the blades in more of a spiral around a torpedo shaped
hub. Mine are on the boat so I can't verify, but I think they have three
blades and spiral nearly a complete turn/twist over about 3 inches. (I'll
verify that when I go to the boat today).

One of the more important elements that I found, was the 2 ft long shaft
that I had on the prop. it acted like a weight and also helped to keep the
the line taught when the going is very slow (even hanging straight up and
down.

If I remember correctly, I got about 3 amps once the boat speed got up to
about 3-4 knots. Nothing noticeable below that. But enough to stay ahead of
the autopilot or running lights.

--
My opinion and experience. FWIW

Steve
s/v Good Intentions