I have water working in ProSonic now. Instead of having two seperate palettes like I originally wanted, I went with what I call a "water map" which simply says "replace color A with color B when drawing water". It maps out conversions for all 256 colors.
Also, I should have a picture from the SatAM game fairly soon. It could be as soon as today, or it could be in a few days from now. I'm trying to get out a picture by the end of the month if possible.