(submitting for ShoesForClues)
As can be seen in the following 2 GIFs:
^ transparency of that brick is 0.01.
When bricks of any transparency enter terrain water, it just seems to stop rendering for the portion underwater. Even the particle effect in the first gif seems to be cut off by the water.
Can be replicated in studio as well. Just add some terrain water and set the transparency of a test brick to not 0.
Would require some rewriting of their rendering logic to correct this. Only way I can think of them getting around this issue, would be to render water off screen to a FBO, then writing a shader to lay water ontop of areas that it is clipping.
Though remember, this is a fundamental problem of computer graphics that utilize transparent geometry.