Thanks, yeah it was not obvious how to solve it, I tried a few different things but ended up using a dedicated layer of autotiles/terrain. On colliding with the water, I will remove the tile and reconnect the surrounding tiles to get that connected effect, not sure how optimal that is but it worked for our scale. The Godot 4 tile editor is really nice, the use of layers alone is a game changer.
Thanks for playing our game!