You can add sea, but a beach I think would be difficult unless it was in its entirety a scene prop.
I've got a ship-to-ship battle and a port scene in my Sicily mod:
http://i93.photobucket.com/albums/l69/nijis/navalscreenshot.jpg
http://i93.photobucket.com/albums/l69/nijis/syracuseharbor.jpg
The sea level is itself a scene prop ("waterplain" from Yoshi's pirates mod).
If you play the mod, Palermo harbour actually has a bit of a beach. You'll notice, however, that there's not much land.
One problem is that you have to seal off the edge of the water with invisible barriers, because there's currently no way to model characters being in bodies of water that are more than waist-deep.
A bigger problem is that you have to place the sea level higher than the row of hills at the edges of the scene, unless you want to have a low ridge sticking out of the sea just off the coast.
Small islands are possible by doing a huge hill that rises high above the border hills, but it's very difficult to come up with a terrain code that would involve a gentle slope down to the water. I'm trying to do a small fishing village, and not having much luck. If you can come up with some good terrain codes that work well as sea coast, however, that would be great if you could post them here.
