"Lugging" an engine means that you are driving at full throttle with the engine at a low RPM and the transmission is in too high a gear. Since an outboard engine does not have the ability to shift gears like an auto does it's really impossible to "lug" an outboard engine in the classic sense.
Manufacturers of outboard engines take that into account when they design an engine and will specify that an engine should achieve a specified RPM at wide open throttle (WOT) IE: 6000RPM@WOT. As long as you can hit that specified number the chances are pretty good that your engine is propped correctly and you will not be harming the engine if you run it at a lower RPM*.
*Nota Bene All engines (both 2 and 4 stroke) need to be run at higher rpms every now and then in order to burn off carbon build up on the rings and the heads. Constantly running your engine at a slow speed will cause carbon build up and will, over time, foul your spark plugs and cause other problems, including increased fuel consumption. That *might* be what your friend was talking about when he said that you would use more fuel.
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1987 V20 w/1987 150HP Yamaha on a Shoreland'r Trailer
1978 16.5 Airslot w/1996 120HP Force on a Four Winns trailer
1996 V21 w/1993 200HP Mercury on a Shoreline Trailer
All towed by a 5.7L Hemi Durango.
If God didn't have a purpose for us we wouldn't be here, so
Live simply, Love generously, Care deeply, Speak kindly.
(Leave the rest to God)
Silence, in the face of evil, is itself evil. Not to speak is to speak, not to act is to act. God will not hold us guiltless.