Hehe, I figured you'd have some input based on our recent conversations.
Coral priests: Doh! I completely missed that CBM change. I'm of mixed feelings on this one. Yes, that is a serious improvement in the cost per research point, but its also a big drop in the absolute research points so your research is going to be almost half as fast until such a time as the cost disparity translates into extra castles, labs and thence researchers which will take quite some time to catch up...time you're often not going to have with Oceana and R'lyeh breathing down your neck. Even if you double your castles due to cost savings your only making up 1 RP per turn by recruiting 2 of the coral priests vs 1 MotD. Also, using coral priests as your goto research recruitment is going to mean there's a lot less mages of the deep, which means a lot less of the specific random pick that you were wanting right this second at that fort. Coral priests are (mostly) solely research mages, while mages of the deep have a whole lot of combat/forging/summoning potential. I don't disagree magic-1 is a reasonably good choice, though order/luck tends to drop some very nice income events which I find often game changing when playing a nation with very low resource troops. My own preference would be to pick up death-3 if you wanted to go with magic-1. I will say though that part of my leaning towards drain was the near certainty that you'll have to fight R'yleh early on, but +1 MR isn't really that big and you're not gonna win the war in your dominion anyway.
My only refutation on several of your points is that they don't match with my anecdotal experience. I've gotten mother oak up using an underwater nation and niads more than once (I can think of 3 different MP games off the top of my head). It's not really a critical thing if you can't get it up, but its an opportunity to look for. Likewise, virtually every time I play an underwater nation I find myself sitting on a pile of fire gems from voice of tiamat. You don't have to have a huge income for it to pile up when you don't have squat to spend it on, and if you're (to pull some numbers out my arse) sitting on 80 fire gems with an income of +8 when you hit construction-6 you can crank out 5 lanterns per turn using hammers for 11 turns adding 275 research points per turn...and these numbers for fire gems are very low from my anecdotal experience assuming you've conquered one of your water neighbors by this point. Even if you don't have hammers to spare on lowly lanterns you can crank out 3 per turn over the same time which is still a significant contribution. Well of Misery also isn't critical, and also isn't out of the question so just watch for the opportunity. If, say, you're in a game with Helheim pulling hard for Tartarians then yeah you're not likely to get it, but its not out of the question that there is nobody pursuing that type of strategy so just watch for it since you've got the capability and it's in your research synergy.
Manually site searching with the Basalt Kings is a pretty good suggestion, though the opportunity cost is a bit higher than presented I think. As the cost is double the turns of a 500 gold guy vs a 200 gold guy, so its a factor of 5 on how much gold you're tying up, which is pretty damn significant in the early game. The other way to phrase that is if you've got 2 Basalt Kings out site searching you could instead have one mage of the deep casting voice of tiamat and another one leading 60 deep ones into battle. You have a point that you can heard them in the right direction so all that movement isn't wasted, but its a bit more of a complicated decision than just saving 8 gems. Also, you're probably hitting most of your searches with F1, which may be why you're of the opinion you don't get many fire gems. Finally, though I wouldn't use it to actually justify a strategy, it bugs me to think about that theoretic level 3/4 F/W/E site that's sitting there hidden and mocking me.
The etherlord, I'm surprised you're the first to complain on that, I figured that'd be a sticking point off the bat. No doubt he's not your goto guy for anti-magic, but there are certainly times when the risk of a magic duel is very low and you're teleporting him in there for something else, anti-magic is mostly just important if you're dropping soul drain on your 8 MR guys. Which is a good segue into my next point that having a guy who can air drop darkness is a big deal that none of your other guys (aside from your pretender) can manage. Soul drain (infinite reinvig) means this one guy can drop darkness and will of the fates and spam undead mastery or arcane domination or...well, with the right random and boosters even master enslave which is surely not something your opponent was planning to have to counter from Atlantis. If you grant an ether warrior is worth 2 pearls, and you need 21 gems of boosters for a mage of the deep to cover something a naked ether lord can do then the ether lord is only costing 19 gems. Then, of course, there's the things the ether lord can do for you that the MotD cannot. Gateway is huge, as is astral travel. If you use him right you shouldn't have too much trouble getting your money's worth.