[Graeme Dice]

I agree that early age R'Lyeh has some major problems above water, but that's particularly fitting with the theme of the nation. What I'd suggest for a pretender is probably either the ancient Kraken if there are other water nations to worry about, or the wyrm if you want to expand onto land quickly.

For this nation, I'd probably take order 3 and sloth 3, since none of your troops are particularly resource intensive. You can take cold 3 without it affecting you too badly, as the heat/cold scale does not affect income underwater. Magic 3 is a good choice because it helps your research, reduces the magic resistance that your mindblasts and other spells have to deal with, and reduces the fatigue cost of spells by 30%. A dominion strength of 6 is good to keep you from being dominion killed early on.

These scales leaves 258 points for the Wyrm, and 280 points for the kraken. Your national mages have access to every magic path other than air and fire, and fire gems are quite rare underwater, so I'd consider putting air magic on your pretender. This has the advantage of giving you mistform for combat purposes with your monstrous pretender. Thus, I'd probably pick a wyrm with air 3, water 2, and earth 3. This gives you quickness, mistform, summon earthpower, and invulnerability, which is a very powerful combo for a regenerating monster like the wyrm.

Your national mages can find every underwater elemental site through voice of tiamat. Dark knowledge and arcane probing find the death and astral sites, while you'll need to send a slave mage with nature magic around to find some nature sites. That leaves only blood sites, which are rare above water, and non-existent below water.

Your early expansion underwater will probably be from giboleths and gibodai mindblasting while protected by lobo guards and slave troopers. You don't have any non-mage commanders with magical leadership, so slave mages and aboleths are necessary to command the majority of your troops.

Your wyrm should probably go above water as soon as possible to grab the land provinces and establish a beachead before somebody else does.

Edit: Confused sorcery and astral.