Hello, and welcome mcmst26! I'm in a similar position to you, only I haven't bought SH4
From the screenshots I believe I have exactly the same display issue, and I'm running an ATI Radeon 9800 Pro 128MB on drivers that are probably 18 months old now. I'll have to try to get a screenshot of it tomorrow and see if it comes out exactly the same, but I often see a flickering effect along the edge of a ship on the waterline.
I might be wrong, but I think it only happens when viewing ships that are a long way from my sub's location. If I use the free view and fly maybe 5+ km to view a ship, or if I use the views on the , and . keys to jump to faraway ships, I think it's more apparent. If I look at a ship nearby I don't remember seeing it. Will have to check this more tomorrow too.
If the above is true, it's perhaps something inherent to the game rather than a driver setting. To give better performance maybe the game reduces the quality of the rendering between ocean & any ship that is far away from you. The base point is always your sub, not the camera position. Just a theory anyway... will try to look into it more after work tomorrow
I do see that in all of your screenshots the watch officer called the ships out at long range, though.