Simple Water

is creating a plane, changing the alpha, and putting a texture on it the best way to make simple water? The other question I had was: how do you make the texture behave like water in a lake? I know you can move it like

repeat
Jeronimo#=Jeronimo#+.001
PositionTexture MrBeanTexture,Jeronimo#,0
until I can't handle it anymore

But how does the TerraED water do it? I have seen it in the demo, and it does a pretty nice job.

For the "Twilight of the Gods" Demo I had to make an animated Water Texture as well. It was hard work. First a little app created a serie of sin/cos-distorted versions of a simple water texture. I had then to retouche the seams manually, for 14 animation-frames.
The texture was then mixed with a copy of it self that was rotated 90 degrees. Additionally in the game the animated texture is moved in the way you mentioned.