Here's a description of what we used to do back in the old days.
When you've got it working you can just write some values into the current buffer for each position where you want objects to interact with the water.
This method is still used for games today when you need to get the water to ripple around objects.
o daaaaaaaamn, i havent been to that site in hella long ;-) I used to live on that site and other similar sites back in 2003-2005'ish. Talk about a blast from the past ;-] I learned how to draw lines, polygons, and do perlin noise off of that site. And their star field tutorial is still the best on the internet.