I thought you had said the boat was fully restored?
Just my $0.02, but I wouldn't close the transom, although it would look nice. You'd have to add a bracket, and that would add more stress to the new transom.
I'm guessing you have a 20" Shaft yammer on there now, so obviously the easiest thing to do would be to rebuild the transom at 20". I didn't "rebuild" my transom because it was solid to begin with, but I raised it another 5" to accomodate the new O/B. If you ever decide to resell the boat, potential buyers would like the raised transom and 25" O/B, at least thats what a man who's loins I happen to come from told me. The extra 5" sure is nice in a following sea... feels much safer.