Glad to help:-)) I cannot claim any responsibility for the method,  I learned it from tutorials (and the now falling-apart V5I manual).

BTW - when I said "You can do exactly the same sort of thing if you're using a mixed material for your island texture - just insert the the "dist to obj. below" and colour map between the func for the texture that meets the water and the colour node." - I may have been a bit hasty. It might not be that simple. I'd have to try it out myself to know for sure. But I suspect you'll sort something out.

I might (if I have time) have a go at it tomorrow (it's near my bedtime now, here in the UK). If I come up with anything sensible, I'll post it here. Others might like to know, too...

Oh, and be warned: the "dist to obj below" will slow up your render time (it's done by using the render engine to send out vertical downwards rays, per pixel - or something like that - time-consuming)..

Cheers,
Diolma