1) You can kill other players in the water (although the animation is a bit wacky), however you cannot loot them.
2) Jumping into water off of a cliff should not cause health damage.
3) The attack swing range should be increased by 25% at least.
4) Attacking with an axe should be a SWING and not a single-hit-check, to see whether or not you hit your target. As an example, in Darkfall, at any point during my swing I can hit the player, they do not have to be highlighted as in Xsyon combat.