Can anyone tell me the HP of a 99cc Mastercraft generator motor?

[OzFab]

Does anyone see any issues in using a small shim to allow the use if a 3/4" clutch?

No BUT it's very possible to fit a 5/8" clutch to it...

5/8" = 15.875mm; you measured a tad over 18mm which is a difference of around 2.2mm, that would be a lot of rust so, it's possible it is, in fact, an 18mm shaft but, we won't know until you clean the shaft...

The simplest way is to start the engine & hold a piece of emery on the spinning shaft; it should be spotless in under a minute...

 

[freakincage]

The shaft is not 5/8". I did clean the shaft using the method you described. It still measures 18mm (or 11/16", but I don't believe there is a shaft that size with threads I the end)The pic is deceptive...the rust was mainly surface. Based on what I see in the attached link, I believe this has a W-type pto.
http://www.mikeschainsawshop.co.nz/assets/Uploads/Documents/honda-engine-brochures/GX120-Brochure.pdf