1 - Make sure you have enabled DH compatibility in the shader if it has it. Otherwise you might need to manually disable things like fog, etc. A shader with DH compatibility will do a better job at blending. 2 - Bit harder to know. Either DH is still generating LODs or something else is happening. My bet is it's still generating around there.
1 - I tried manually disabling the water fog in Complementary reimagined. It looked the same idk 2 - It is probably it, but it does happen when I move my mouse Like I move my mouse up or something and it appears It is not a constant object, but it follows where the fake chunks were before I moved my mouse