It's only really where air and water collide that requires special treatment. If something can exist in air, then why is it not behaving the same way in water? Below the surface we don't need there to be actual water, just something that tells the game 'this is water' so it can apply the blue overlay and slow the movement and so on. Without being a coder and really knowing what I'm talking about, it seems to me that the entire liquid system is kinda broken, or badly implemented.
But people who can code the engine should be able to use that, they can make a 'plantlike sprite' or something that behaves the way we need it to. This kinda works, but I haven't found a way to make sprites be stationary and not follow the camera, also the sprites parameter only creates one plane, and we'll need two. I did some experiments where I had coral spawn as mob sprite by editing the clams mod. The only light in the tunnel I can see is that sprites can be under water with no problems, the clams mob works fine.
I don't think they consider it a bug, the one who set out to 'fix' this is aware of it and said it's this or nothing.
