Water in ATI "Chimp" demo

Hi everyone!
Do you know what method did guys from ATI (should run on any GeForce FX too as it uses DirectX 9.0) use to make water effect in mentioned demo - water effect I’m asking about is best visible when you switch to view with butterfly sitting on the leaf swallowing on the water surface.

The effect I’m impressed most is refraction on water surface. It’s difficult to say whether refraction takes into account lake bottom height, but must say it really looks realistic.
You could also notice that leaf’s handle being partially submerged in the water is also visible under water with refraction effect applied.

Any ideas on how they did that?

render the part under water onto a screenspace texture (just use a clipplane or similar)

bind as a texture for the water. render the water, and use some fragment program to distort the underWater-texture

You could look at the shaders yourself, they are in one of the .ati files (just open with winzip or whatever).