How could I add water effects(ripples, splashes, particle effects) to physics objects in a way that looks good and performs well? It seems I would need to take into account the object's height in relation to the water height and the object's velocity, but I haven't found a good way to do it.
Water interaction
You will probably have to write a shader or find one already made. I wish Godot had a shader node setup as good as blender.
I have not looked at it myself, but this Godot dynamic water tutorial might be helpful.
24 days later
Still haven't figured out particles, but for water ripples, I found a technique that works well.
I have a separate render layer devoted to rendering a ripple height map, and a camera which renders only that layer. In my water shader, I use the result of this render as a bump map. It isn't limited by size or resolution, and multiple water meshes can use the same ripple map. Performance is questionable, though...