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This is a very cool water effect, written by Scott Scriven.
The full documentation is in water.txt

This code uses palette tricks to do the height mapping, and assumes an
image size of 320x200.  This means that if you want to use your own images,
you'll need to create them as 320x200x8 images with a palette that ranges
from darker colors at entry 0 to lighter colors at palette entry 255.

I really like this demo, so be sure and read water.txt to see what keys
enable what effects and how it's all done.

	-Sam Lantinga