Is there any reason why the water level decreases every so often? Also, frequent and massive lag spikes seem to be a thing too as a result as the game tries to update all that water.
I noticed it too in my LP, I took extreme measures to get it to actually stop, namely a line of glass under the water from map edge to map edge. Soon as I finshed that up the water stopped moving and I stopped having issues with liquid updates.This something I noticed back before 1.3. It was odd.