I know I've actually extended the lots out into the ocean before (I have up to Seasons), but couldn't get it to work on the particular terrain I was experimenting with. I have a great terrain for a "sandbar" neighborhood tho, and will fiddle with that later.
Here's the pictures I did manage to get:
Lot Placement:
Lot View:
Hm, seems that the entire lot and its surroundings are now "at the beach." BTW, TS2 looks great on Phil's big monitor!