This has been an ongoing issue since at least 2016 and I’m not seeing any fixes. I’m hoping someone can help me (and the community at large) provide a fix. I’m not great with C++, but if that’s what it takes, I’m willing to try.
As for my personal experience, I have a large ocean world and when the oar hits the water a line trace is used to detect whether there is water and how far the reach is from the player. If I am on a water plane in sublevel 1 and I am hitting the water in sublevel 2, it doesn’t detect anything.