I don't know if the fact that you're at the bottom counts. The fact that your propellers are still certainly does. The fact that you're as deep as you can be likewise. But I sincerely doubt that the game makes a distinction between "sitting on the sea-floor" and "not sitting on the sea-floor".
As a side note, the trick to settling down is to not move forward or backwards. Make your sub dead in the water about a metre off of the sea-floor and hit "D". The sub should start drifting vertically towards the bottom, landing lightly without taking damage. To get off of the bottom, hit "S" for surface, or manually set your new desired depth to something shallower by means of "P" or the Depth dials.
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The trouble is the AI see straight through any land mass so you are still visible 
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Yesh. It'd be infinitely nice if you could do things like hiding in underwater cracks and holes or even caves, but it's a no-go in
Silent Hunter III. Not that the game has that kind of detail in the first place.