Oil and fuel are no threat or difficulty to you right now.
Also custom splash effects should be added.
I agree with your comments on this @tambry, in particular the fact that you should drown, and the fact that you have black bubbles. I won't have time to work on this one though - are you in?
@SpaceToad I will see what I can do.
The not drowning thing is a forge bug. This method makes the code always think the fluid block is empty, so it doesn't apply the drowning effect.