Does anyone know of a mod, or whether it is even possible to make one, that automatically changes the PC and NPCs clothing to swimwear when they are completely submerged (actually swimming, not just in water)? Or maybe something that is toggleable, so I could hit a key to change, but if I accidentally fell in I would not. Maybe even apply some sort of swimming penalty when falling in wearing clothing vs heavy armor?

It makes no sense that anyone, if they didn't have to, would wear full armor or their normal clothes if they knew they were about to go swimming. I use nvde skins, and it's a bit startling to walk up on a group of mixed hunters completely naked, too.

I'm not looking for modern-day swimwear, either. The default underwear would do.

Any ideas?

One last question: should I be able to use a short blade underwater? I seem to remember being able to do so, but my current playthrough I can't.

Take a look at http://www.nexusmods.com/skyrim/mods/24890/? by Jaxonz. I think it might be what you're looking for. You could also look at http://www.nexusmods.com/skyrim/mods/34222/? by Qeezer. It does a similar thing for any followers you might have with you.

As for your second question: sadly, Bethesda chose to remove underwater combat from Skyrim. It is a decision I still don't understand.

Yes, yes indeed, those two mods will be perfect! Thank you, so much! Now to find his and hers swimwear that doesn't look like it came from a modern designer shop.

I must have been thinking of Morrowind, then. I'm kinda surprised no one has managed to mod it back in, yet, but I know there are limitations to everything.

It's good to see you are still here, Pseron. It's been a while for me and It's nice to see a familiar face.