I've attached a quick sample of what I'm talking about. This is just quickly thrown together of course. There's a WALLS sheet, a FLOOR sheet (cave floor), and a SUBFLOOR sheet (the grass). I've just got some inner/outer glows on the floors, and a drop shadow on the FLOOR to give the effect of a drop-off. The WATER sheet is my fractal water texture, with an Edge Fade on it (25-50% opacity). The shadows need to be tweaked, especially on the ledge, but I just through this quick sample together while I was at work; the points from the fractals are horrible, too--the real map isn't so rough looking. I like this texture style though (Jon Roberts Dungeon Style Pack), and I'm not looking to change that. I just want it to look like a waterfall.
I've tried sticking some skinny fractal lines all over the edge of the falls, and then blur/transparency them a little, but it just doesn't feel like it's coming together. So I'm hoping someone here has some better advice.