This is still not perfect and might have other effects that I did not have time to check (off to work here)
You will have less distortion but there is still some left. I think the answer might still be in that "Misc" folder...
JSGME READY WATER DISTORTION "BETA"
http://files.filefront.com/WATER+DISTORTIONrar/;8009981;;/fileinfo.html