
Shitastic edit, I know. I'm no expert, but that's kinda how I'd start for shading the water.
As far as the waterfalls looking wrong: I think that the should either go directly down, like Terley said, or maybe they should arch a bit, all depending on the force of the river you want to portray...either way you go, you should be consistant.
This is coming along great. Good luck on the water.