I've thought about making something like this before.
For the water level at mapgen time you might want to look at the on_generated in my climate change mod as it does more or less the same (except just in 1 direction hehe).
I like it also how are the shops too far ? There is a node you can right click that teleports you. Didn't feel like the longest journey to me at all ... (are you noclip flying there ? ^^ )