Hi John:
Indeed, (...and, in theory), the use of MSFS SDK Polygons with assigned Altitudes for the vertex points should work.
The water at Sechelt is ultimately connected to the Pacific Ocean at Sea Level, and thus should be set at 0 Meters AGL / AMSL
If we do not assign Altitudes, MSFS rendering engine assumes it should merge co-planar Polygons and vertices fall back to the local terrain mesh; that MSFS local terrain mesh may- or may not- be correct.
Be aware that the default
Falloff Distance values for Polygon types may have varying minimum extents for overlap, and that shaping terrain and/or shoreline slopes descending into water may require use of separate Polygons when precise shoreline drop-offs are required, but you wish to blend into adjacent Polygons on another side of a scenery area.
Also, in a (presumably temporary ?) attempt by Asobo to take some of the heat off regarding "water creep" up onto shorelines, all scenery by default seems to set water Polygons at the same Altitude as adjacent local shorelines.
Consequently, to see the terrain and water at MSFS' internally assigned mesh Altitudes which are closer to IRL, we must do this:
MSFS DevMode Menu > Options > Ground >
Un-check:
Enable Water Flattening (
...each and every time we start a flight 
).
After changing the latter setting, you will begin to see what the "lay of the Land" (and Water) actually is locally in MSFS terrain.
Additionally, one must set: <Esc> Options > General Options > Terrain Vector Data:
Ultra ...for maximum detail.
Remember that we just had a SU-10 Canada scenery update, purportedly including a terrain mesh upgrade, but I have not checked to see which areas were actually updated with elevation data yet.
The base data previously in use for Canada was 23 Meters between elevation data points.
I'll check back after I see what Canada GIS now has available for the Sechelt area in case that may prove to be of interest.
GaryGB