1: No, not on release, water level must remain constant throughout the level, water is just one large plane stretched over the level. But this is an issue we have been told will be worked on after release.
2: Yes, through the use of scripts the water level can be changed in game.
3: No, characters act the same underwater as they do above water, they have no concept of swimming or water. However, once you kill them, they will act accordingly, floating around the water with ragdoll.
I see you are new here, so I cut you some slack. Please use the search tool in future, all these questions have been answered at least 50 times. Check the 'Your x10 questions answered' sticky at the top of the board, it says it all in there. So yeah, be careful, dont wanna be flamed now, do ya? =]
Remember to search first in future.
~Flash
Hippopottomonstrosesquippedaliophobia