Some points to consider. A generator application is typically a constant speed application, and the synchronous speed for a 60 Hz machine is 1800 or 3600 RPM. Most small generators you would find, such as Harbor Freight units or whatever, are running at 3600 RPM. You probably don't want to run your MB diesel at that speed on a continuous basis, so you would look for an 1800 rpm generator.

It will be difficult to find, I'm guessing. Second, at 1800 rpm, your engine will produce significantly less power than its full rating. I don't know the rating of a 617 but let's say it was 100 HP, for the sake of discussion. That 100 HP rating is probably at 4000 RPM or some fairly high speed. (100 HP by the way is 74.6 kW, in this case, mechanical kW). At 1800 rpm, your engine will produce significantly less power, how much less is hard to say without a set of performance curves. Let's say it was 60% less power, so you are only putting out 40 HP, or 29.8 kW. Still plenty for home use. But a generator in this size range is probably in the neighborhood of 90% efficient, which brings your net electrical output to something like 26.8 kW. Still plenty for home use, however, unless you live in Trump Castle.

How much fuel would you use? Well, let's guesstimate that your fuel consumption at 40% engine load would be about 260 g/kWh. That translates to roughly 2.16 gallons per hour if you were running at full load of 26.8 kW, which you would not be. If you were running at an average load of 4 kW, which is fairly high for an typical house unless you have the oven or A/C on, you would probably burn fuel at about 300 g/kWh, but that's only about 0.4 gallons per hour. So that would give you an idea of how much fuel you would go through.

If you can get very cheap or free fuel, and you could make your generator rig cheaply, it would be economic to make your own power. Then again it might be cheaper in the long run to buy a used small diesel generator to begin with rather than trying to make your own out of a 617.

Disclaimer, I'm not familliar with PTO type generators. If they only require 2240 rpm as coachgeo says, this could be a reasonable proposition, i.e. to run your engine at that constant speed, however coach says the generator ran at 540 (probably 514 which is the 60 Hz synchronous speed) you would still need a gearbox between the engine and generator.

Rgds,
Chris W.
in the diesel generator biz