I think it might actually be lack of isometric perspective that makes it look higher, as if it were hanging over the bay in an incident angle. also the the dark stripe on the edge of the sand (I know it's wetness) make it look like the water is casting a shadow, and light stripe on the edge of the water(I know it's foam) only enhances the effect.
I'd draw the erratic water border in a separate image and then translate it to ISO (sorry, dont know how...I'm sure there was a tutorial about it once, try Zoggles' site) and try to give more detail to the foam and wetness so they dont appear to be stripes.