A textured plain would work perfectly, for something as cartoonish as a worms-esk game you should be able to get a decent placeholder using a drawing made from paint (you just need to practise your blending skills). Though if you're serious about programming/graphic creation and want to do all of the work yourself, you should spring for something like Adobe Photoshop/Corel Draw (photoshop for realism, corel for cartoonish stuff). I know there's a bunch of free graphic tools out there just not sure of their names, someone will come along and give you the info' (you might've gottem more replies if you posted in 2D Chat, but just leave it now).
Once the plains are in, you can easily check if a player's position is < the water plain's position + the water plain's y size / 2, if so you can kill them. You've got the right idea down.
Projects: Online CTF Game | Newcommer's Guide to FPS's