Thanks a heap guys! Keep in mind this is for low tech old laptop...
has about a card which supports some directX 7? 8? and nearly no OpenGL (software drivers only, i have to use some scitech directX emulated OpenGL thingo). I'm not even sure if it supports multitexturing, i sure hope so...

So...

1. Make a giant plane for water, give it a tiled water texture, make it shiny and transparent

(I have already done the above using a hand-made-3d-thing similar to 2d iso landscape demo in asphyre, but it wasn't all that cool... no z-buffer to stick islands through water with, and when i did make a software zbuffer, the only framerate i could get that was nearly decent was around 20fps at about 256 x 256 rendering area...)

2. Make some island models
3. Make an individual texture for each one that works well
4. Load the island models and precalculate the alpha - adjusting the vertice alpha depending on depth below water

rendering loop
5. Wiggle the water vertices for viewable area using a sinus function of some kind
6. Draw the islands in the viewable area (i'm using a top down view, the camera basically stays static, so its simply just a rectangle for the screen I draw)
7. Draw the water
8. Draw anything I want on top, player models etc

i have read the texture splatting articles, slightly too complex for me at this stage... and like i said i have no idea what my laptop can handle past putting colored rectangles on the screen (jk - it runs games like ummm age of sail 2, however halo didn't work)

thanks again peoples