Very interesting in what needed to be overcome to do motion capture underwater. Those nasty bubbles that confuse the tracking cameras as they cannot distinguish between a bubble and a tracking dot on the actor's suit.
But I don't think it was that bubbles were being read as balls more so than the bubble acting like lenses and distorting whatever was behind it. With that said, were RFID emitters ever considered?
Apart from motion capture challenges, there were also some advances on simulating micro water behavior - that is how water seeps in between small features such as the weave in cloth as shown below in this image from the movie:
But there is still some debate whether or not this scene is 100% CG or a combination between CG and live action. We will probably not know for sure until the movie has finished its theatrical run and the VFX artists are allowed to spill the beans.
As for me, I saw the movie in IMAX 3D and it was just visually amazing. Definitely worth the $20 ticket price -- ouch! But only for a James Cameron movie would I pay that much. Story wise, you have to go into it realizing that it is setting up for the next 3 movies so there are some things left unanswered and not the self-contained and complete story that you got out of the first movie...but still good storytelling but not quite perfect.
Dave