If you are having issues with viewing the new water quality above "Fair" and when you try you see a type of mirroring effect where instead of water you see mirrored portions of the landscape, more than likely you are using an addon that changes your Viewport.
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Unfortunately, at the moment, to see the new water with high quality, you cant have any viewport running. Ive tried 3 different viewport addons, one that was even updated to work with Cataclysm and it just simply will not work.
My guess is this isnt a permanent issue, just something overlooked in the rush to push 4.0 out the door. If you disable whatever addon is doing the viewport, you should be able to see the water just fine.