Hi Creat326,
No, that's definitely intentional. The texture maps and alpha maps are intended for the heightfield surface. Hence, they always describe the land type, regardless of the type of water that may or may not be above it.
Perhaps it's best to think of this in terms of an FPS game where you're swimming underwater. The colour of the texture applied to the heightfield mesh under the surface of the water is going to be the ocean floor (i.e. sandy), not the ocean surface (i.e. water waves).
This is demonstrated in the image below, where I've run off the side of a map so that you can see the heightfield texture beneath the water plane. Note how the texture of the terrain underwater (i.e. the texture map) is still representing the colour of the land (sandy, rocky), not the waves above, which are handled by a separate water mesh and texture.
[please scroll down to view the underwater section*]
- UnderwaterTexture.jpg (108.2 KiB) Viewed 22034 times
It may confuse matters slightly that L3DT, by default, also bakes the effect of absorption of light by water onto the light map and thence the texture map, giving the blue/green underwater look. This is provided for renderers that don't do their own underwater light shading, but it can be disabled in the light mapping wizard.
Anyway, back to your problem; what you need is a way to bake the water map texture onto the heightfield texture. This is again possible with a custom script, but it'll take me a little while to cook that up, as there's quite a lot of other activity on the forum today. I'll let you know when I've got a script ready.
Best regards,
Aaron.
* grrr...I cant seem to control the display size of attached images.