Wow! You sure have a fast turnaround at times. Thank you very much. Of the two maps, I prefer the level 2 map that's not distorted.

And now you're about to start on a canal city? Check out the thread in town/city mapping where RobA was soliciting advice. Although I doubt you need any pointers, there are few bits in there that might provide some aid. One cool fantasy canal city I've seen done was Eltabbar in Thay in the Forgotten Realms. The streets and canals of the city were laid out in a giant rune to contain a demon prince that had been trapped there long ago.

Best of luck and good mapping, Terrainmonkey.