Hey Graham,
1) kriller's Pacific Enviroment Mod or W-Clear's Enviroment Mod fixes this and much more, check out the Mods Section.
2) Both mods above enhance the graphics big-time
3) Trigger Maru, Real Fleet Boat and Run Silent Run Deep all deal with this issue and much much more, check out those threadsm again in the Mod's Section. Of note RSRD can be used by itself or with TM or RFB.
Good luck with it
And your right, there are many great mods for SH4, be sure to take some time and check them out.
RDP