standpipe

Hi All, I've been lurking on these forums since I bought my '74 E29 "Condor" in July of '22, but I have to run something by y'all in case I'm doing something crazy. After removing, rebuilding, and reinstalling my A4, I found my existing exhaust standpipe (riser?) inner pipe is rotted out...

My 1971 E-29 has a bulkhead mounted standpipe exhaust system that tends to clog with salt build-up. Can this muffler be replaced with a water-lift system? If so, where should the water-lift muffler be located? Thanks for any ideas. --Ray Hughes.