This issue with Incorrect alpha blending of the water and foreground has been present for years in Mystic Warriors.
I'm wondering if it's some technical obstacle, or it's just passed the tests without noticing.
You have to proceed with playthrough a little to see it. The water in stage 3 is not immediately transparent, not a big deal, but in the middle of stage 7 the sprites are underneath the foreground that supposed to have alpha gradually set to 0