Damn, it's been more than three months since I've posted the last update. I've been very busy lately with university and two jobs, and I just haven't found the time to work on the engine. This week, I could finally dedicate some time to programming again.
I've completed the character controller and the terrain renderer, added support for sky boxes and improved the water shader. In addition to the usual reflection/refraction stuff, it eliminates hard edges where water and terrain meet: i render the distance between the water surface and the ground into a texture and then use this to mix the distorted refraction/reflection with the undistorted refraction.