Most bodies of water in the original were in fact not animated. Where they were though, the following technique was used:
They were animated by me first painting what I thought the reflection should look like in still, and then mirroring it upside down and uploading it to any random "generate awesome water effect on my image" website
and then cropping away everything but the water. It worked beautifully and was truly effortless. I recommend this process to anyone who's working on a low-res animated backdrop.
The problem with simply applying the effect on what you want to reflect, is that it becomes too clean, and simply looks too "generated". You would likely get the same problem with a module that does the job for you. The positive thing with using a module I suppose, is that in theory you could make it reflect your character and other dynamic items too. Needless to say, thats cool and enhances immersion. (Like those kickass waterpuddles in mccartthy).
In the HD release though, we are indeed using 3d tools and raytracing to achieve more "realistic" reflections. They look rather mundane in still but look absolutely gorgeous when in motion. The tricky bit has been making them loop over time seamlessly, while also keeping down the amount of frames to something bearable performance-wise. blueskirt:
I'm glad you agree that the whole "brand" works better in HD. To me it's mindboggling how often people cling to low-res stuff "just because". It does serve many brands well though, but for TJD, I didn't really feel it was the best way to go. I was losing so much detail it hurt me just looking at it.
I totally agree with you that from an independent developer's standpoint, being stuck with technology that only works on one platform is a bit of a bummer. Let's hope AGS sees changes on these fronts in the future!