I think the person in the water is Daud.
Anyway, this AU is really heartwarming. All the things that could have been. I really did love Treavor Pendleton and Teague Martin; I really wish they hadn't followed Havelock's scheme. Daud's scene with the Spymaster is perfect, capturing Hiram's obsessive paranoia, and your artwork is as amazing as ever.
I'm a little curious how the very beginning panned out, though. Did Corvo use the Mark to stop time? Did he explain to Daud what Burrows had done, what would happen in the future? It's a little unclear.