Looks like you let it get wet and shrunk!
And "Yes" the flywheel should be solid.
Nice Find!
The engine belongs to a gentleman here in Minnesota. I saw it at the Lake Itasca Region Pioneer Farmers show. It is a running engine built from a kit provided by Cole of Texas. The kit includes rough castings, valves, crank and plans. The kit is still available and not overly expensive. However, by the time the machining and assembly is complete, I believe it would be a little pricey.
This engine was built by the brother of this gentleman in the '70s. His brother passed and the engine passed to him.
Cole sells kits for many different miniatures. If interested, you can google it using "Cole model Holt Engine".