Hi there! It is too bad that you abandoned this! I was about to suggest getting a BRIGHT backlight for the waterfall, possibly combined with food coloring as others suggested. This gives you a large amount of CONTRAST between the water and whatever is the 'background'... this is what makes an image great is the contrast.
Also once you get your light all setup, try testing it at night... wow that would be COOL!
I am interested in looking at your software code, although I need to brush up on my VB. The main reason I want to look at the SW code is I am doing a similar project using LED's. I want to make something similar to this:
http://www.poiplay.com/index.html
http://www.poiplay.com/vid_fnf2008_cam1_670.html
If you think about it the concept is nearly identical to yours except using LED instead of solenoids... in fact it's the same as your "Test" apparatus with LED... except mine will be miniaturized in order to fit in something more portable.
Thanks for your thread, it was very interesting/entertaining. I wish you luck with future endeavors!