For the Island I would us 2 planes 1 for the water and 1 for the islands. Make the islands then make a plan that intersects the parts of the islands you want above the water. Instead of trying a infinite plane try making a dome and adding a eviroment sky to it, that should help with your horizon line a lot. If that still not what you are looking for you can also add a bit of depth of field to your camera settings.

Hope that helps....