Late reply, but I think the bluriness is because of the skybox/lighting. It must be somehow defined in Light.dbc or similiar dbcs. I found it out through LightMapper, some values define what color/transparency the water has while swimming underwater. Also, there is no known way (or at least it's not common knowledge) to change the sky/water color into brand new one, just predefined ones in blizzard DBC, you'll have to do it the hard way.
I know the thread may be no longer relevant, but someone may use this tip.