You really don't mind the aliasing on the distant water? I found that AA didn't really improve it that much, maybe with 32x it does, but there's still a pretty significant difference between HDR on and HDR off.
I do want to see how the water ends up looking with the HDR fix thing tomerk mentioned.
Naa, I think it looks http://c.photoshelter.com/img-get/I0000UtPFXspZnOc/s/850/850/E08-PEaks-Island-High-Tide-Picnic-Point-Sunset.jpg.
Not sure what res you are playing at currently palidoo, but 1920x1080 in HDR plus the 32x AA looks pretty darn nice with tomerk's water in it's current form IMO.
http://i295.photobucket.com/albums/mm150/far327/potentialmemoryissue.jpg
So here is what I gathered from the crash...
Loaded Oblivion save to Water Front. Memory usage at 1.8gb or so. Used TCL command to fly around and admire water effects for about 5 minutes.
Fast traveled to Weye. Memory usage now at 2.3gb. Flew around for 30 seconds.
Fast traveled to Anvil Lighthouse. Memory usage now at 2.8gb. Flew towards the Anvil docks enough for the full cell to load. Memory usage at 3.1gb
CTD at 3.1gb, BUT within a matter of a few seconds, the memory usage on the Oblivion process shot up to 3.8gb immediately after the crash (?) (what you see in the pic)
I can't guarantee that this was caused by your water package for sure yet. But I didn't have these frequent crashes until after I installed it.
I'll make sure to remove your mod and re-verify the stability of my game.
Either way, I guess that's what we are here for. Testing and reporting issues.

Thanks again for the glorious water!