I finally got around to really digging into some of the Flash’s DisplacementMapFilter effects. I started messing around with a script from Pixel Hive Design to create a realistic water effect in flash. I had looked around at other peoples solutions but they all relied heavily on actual bitmaps for animating the water. The tutorial at Pixel Hive Design was the most realistic and the script is less than 1kb.
Anyway I started playing with it and modified it to the point where all you have to do it call
and it will turn that clip into rippling water. Click the image for the working sample, or download my modified source below.