A couple of interesting things ive noticed while playing around with these shadows,
first, ive been on a quick trip to the museum and it seems that pretty much all stock surface units are already perfectly set up for shadows, sadly almost none of the usermade ships/subs work correctly with dynamic shadows.
Second, the sh3 devs obviously did put some thought into their shadow system as there is a nice fade in/out with distance, so even in convoys you should still get a reasonable framerate as only those ships within a certain range will be shadowed (looks to be around 500m).
rascal101: most of the errors you mention are known about and are there because dynamic shadows were never fully implemented by the original devs, this is why RB is going through 1 object at a time starting with the viib player sub, pretty much picking up where the devs left off.
You do seem to have a few new bugs i cant recreate though, this transparency and flashing on surfaces you mention, maybe its just a quirk of your particular gfx card??
+ive looked around the harbours too and there seem to be no shadows on the harbourkit objects at all (transparent or otherwise) excpet those cast by docked ships so im unsure what could be causing the problems you experienced.
Its still early days, ive no doubt all this will be sorted in time.