I'm looking for a way to emulate this effect from Spyro in which, in addition to the depth fade—which is easy to implement—there are outlines where objects come in contact with the water, nicely grounding the objects in space:

If I were to add a lot of vertices, I could vertex paint the shore, which is quite possibly what Insomniac has done here. But, that would make iterating a massive pain. And, I'd like to avoid unnecessary vertices where possible. I suppose something could be done with ambient occlusion, but that sounds pretty hacktastic. Any suggestions?