I still think that water cities are a bad idea.
Experimenting with water walking settlers was fun, but I couldn't resist the tempation to circumnavigate the world before settling down, so I removed it (or rather didn't include it in the 0.32i version). I also managed to get most of the goody huts on most continents, and was lucky enough to get a free settler from the first one I found the first time I did this. I just realized that there is an obvious fix to this exploit. I'm giving them Water walking again, but this time making Oceans impassible for them.
I still think that it could be a good idea to take away Water Walking from Cultists (since in my version priests don't require state religions, only their spells do) and to let Speakers cast a spell that grant a Temporary Water Walking promotion to the units in its stack (probably only to disciples, melee, and civilian units, but maybe also archer and recon. Water Walking Hippus Knights are too much. I might also make the temporary water walking promotion increase the movement costs, and if someone would change the schema to allow it I'd make Oceans impassible to these units until Malevolent Designs). That would allow water walking settlers too, but much later in the game.
In my version water hammers aren't that much of problem, at least later on. I've implemented the BtS Levee building at Engineering and given the Lanun the Dike UB. (I also added the Customs House and Feitoria for the Lanun at Taxation.) I alo think that (one of) the OO cathedral(s)/advanced temples will provide +1 hammer per water tile.