So, I'm starting to get my head around what's happening with the lakes not
filling up. As it searches for a point lower than the water level in an
increasing radius, it doesn't take into account whether or not the water can
actually flow that way.

So, for example, maybe the lake extends away to the north, beyond the current
testing radius, and there is a ridge to south, but then a lower point. Since the
lake extends away to the north, the algorithm detects that as the lowest point
(equal to the current water level), and therefore does not raise the water
level, but does keep expanding the radius. Eventually, it does detect a lower
point, but it's on the other side of the ridge. Right now, the algorithm has no
method to detect that the water can't get there from here, so it goes ahead and
jumps the stream through the rock to the other side.

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