tried 3 different terrain mods (one of them using a grid) and the water animation worked, could you name some? it can be an issue indeed, just need to figure out which ones cause trouble.I think any water mod won't work with the effect, we need a new mod for that.
Yep you are right most water mods works even the volcanic lava, the only mod that doesn't work is one water texture from age of perfect expansion :D