Ummm...so, I just tried something that seemed very stupid to me assuming it would either crash x10 or just do nothing:
I took a dynamic entity that has a spec and normal map and applied the default water shader in x10 to it. And guess what????
It worked...kinda! I've got water moving across a 3D mesh. It does something weird and it pans across my whole diffuse texture when I shift my orientation. Now, I have no idea what role the spec or normal map is playing (if any) but I can tell you that when I tried this with a dynamic entity that didn't have a spec or normal map, it just turned it black.
So what I'm gonna try is actually putting a diffuse texture with a black alpha channel on an entity and see if I get a water bubble. I couldn't control the speed of the water, roughness, color, or any of the in game paramters rather it had a default speed and water effect. But there is definitely something to this and I think we might have puddles real soon and multiple heights for water effects. I will experiment some more and report.
Something else funky...I tried this with the soft decal shader too. It wasn't quite as exciting but it caused the bottom of the entity to be semi transparent and kind of "misty" so maybe there is something to be done here as well.
More later...but this is potentially very exciting!
A video would tell a better story...but that is animated water on that crate: