First, if you don't have a wear-groove in your crankshaft where the seal lip has been contacting it, that is great. Inspecting an oil seal for wear involves quite high magnification photographs, looking just at the corner of the lip that touches the shaft. I feel confident that yours is worn. The only other common cause of oil seals leaking past the lip is misalignment: either the crankshaft being off-center in the seal, or the crankshaft running out of true. (Of course seals can also leak around the outside, due to a damaged housing bore or seal exterior).
I doubt the heat transfer from muffler to fuel tank will cause vapour lock, unless it is extremely hot - which in turn seems uncommon in Tasmania. Rather than modify your engine, I think you'll get a better result from finding what is wrong with it. Most likely there is a fault in carburetor, ignition, or valve or piston-ring sealing. While you have the engine apart you should attend to all four.
