do you have different data substantiating your post?
Yes. It is repeatedly stated throughout this thread.
I was also wondering if I should be sizing the fuse based on the potential battery output or based upon my projected load plus a healthy margin? We are not a power-hungry boat.
The answer is "both." Overcurrent protection must address both issues. Basic overcurrent amperage (what we generally refer to as the fuse's rating) and amperage interrupt capacity or AIC (what we generally don't refer to).
The "projected load plus a healthy margin" is only data point #1 for selecting overcurrent protection. That's the one we are most familiar with. Based on a standardized wire gauge (AWG in the US), the NEC has adopted a table of acceptable amperages for a given cable size (the source of data point #1). This standard has been uniformly accepted by other regulatory bodies, cable manufacturers, fuse manufacturers (like Blue Seas), and even advisory bodies like ABYC. Those tables are easy to locate and understand. If you need to power XXX, you can figure the cable size, the fuse size, and even the cable length to keep the voltage drop within 3%. That protects the cable
under certain conditions.
Data point #1 addresses the "we are not a power hungry boat" issue. My main feeds are fused at 250A and I can't even imagine a scenario where I would have a continuous load over that. I do have a approximate 500A load for several milliseconds when starting the engine.
All of that is fine for data point #1. For many applications, there is no need to think about data point #2 and it can be ignored. In fact, some can't even see it. But it has become an issue with a new generation of batteries now available to the public. Batteries that can produce a ****load of power, i.e., what you have accurately called fusing for "potential battery output." I think it is generally refered to as short circuit capacity or SCC. That is data point #2 that a fuse, breaker, or overcurrent protection must contend with. It wasn't much of an issue with flooded lead acid battery banks, as recreational boats didn't have tens of thousands of amps for their potential battery output.
It is possible to ignore data point #2. To date, there are not common tables like with data point #1 that instruct the public on how to deal with it. But as with data point #1, it is best to compute SCC "plus a healthy margin" in choosing an overload protection device. The worst case scenario is, should a mainline positive cable fall off and drop on the engine block or another perfectly grounded surface, what is the total possible SCC (plus a healthy margin). The #1 data point fuse will certainly pop, but can the fuse handle data point #2?
One answer would be I don't actually know and neither does the ABYC. Therefore, I'm okay. Another answer would be based on what the battery manufacturer says is the SCC rating for the battery. They don't say? Well then again, I don't know and neither does the ABYC. Therefore, I'm okay. Also possible would be to test the battery and obtain its actual SCC. Dangerous, expensive, and probably not good for the battery. I'm not comfortable with those scenarios, so I went with general industry knowledge and guidelines for approximating the SCC of a LFP battery bank, whether or not those guidelines are yet to be adopted by the ABYC. The emerging consensus is that an LFP battery can produce a SCC of 5,000 amps for each 100Ah of capacity. That is likely an SCC padded with a "healthy margin," just like the AWG tables for computing data point #1.
It is still possible to claim that I don't really "know" the exact SCC of my batteries in an imperical sense (and therefore data point #2 can be ignored). In that case, an MRBF fuse rated at an AIC of 10,000 amps can handle the SCC because I don't know the actual SCC. I don't have the data. I can't figure it out on my own and the ABYC has not yet told me what to do. I could just fixate on data point #1 and claim that is good enough. Turns out that upgrading to handle the computed SCC (likely padded with a healthy margin) was easy and painless for my install.