Sport tunnel rules are in section H, Nitro Specialized Rules, of the IMPBA rulebook, which you can find at the IMPBA web site, http://impba.net . Whether an engine is legal for sport or just regular tunnel depends on the nature of the mods, check the rulebook.
I don't run my tunnel in the hydro classes, I prefer not to irritate the rigger guys by doing such a thing. I have seen at least one person run a fairly slow 20 cat in the hydro class...
Many years ago tunnel guys used to run with the hydros but these days the riggers are just so fast the tunnel hulls would in most cases just get in th eway and be more of a blocker than a racer. There are a few exceptions Ernie Leflure is one of the exceptions and there are a few more out there.