I took it off and put two more pieces of original mesh I found inside the previous muffler exhaust and added the stainless dish washing mesh as well, to pack it in tight. I made sure the bottom clip was secure before fitting the exhaust back in.
Runs like a top and is satisfactorily quiet now. Also reshaped the outlet of the muffler to follow the original shape before putting it back. I have a new one I used as a guide.
No smoke coming out the side either!
Pics showing the mower, the previous exhaust with the corroded outlet (should be metal most of the way down -all gone.) and posed next to a sister unit of mine.

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IMG_20180916_140759-1000x563.jpg (126.85 KB, 256 downloads)

Ahh, if only victa had kept producing the thumblatch catcher series, they would be in better shape today!