Yes, I, too, had heard that the COTTON BLOSSOM was powered by aircraft engines! There's mention of it in the book Tales of the Mississippi in the chapter on showboats -- and there's a good picture of the boat during the filming of the movie.

In some other pictures of the boat I have noticed the housing you mention -- but I've never noticed the blue haze of exhaust smoke in the final scenes where the COTTOM BLOSSOM steams off into the sunset and Joe is on the fantail singing "Old Man River". Probably because my eyes are always filled with tears!