grassyknoll,
You probably don't want an answer to your last question. I was not pleased, in general, with the UW photos. Here is my very limited advice, having taken about 600 UW photos on our last dive trip before selling the TZ1.
1. Ignore the Underwater mode. Put the camera in "Macro" mode and set the White Balance manually using a gray card. The underwater mode made the vast majority of my photos appear washed out and green, not blue. If you want examples, PM me and I can show you.
2. Keep OIS on. I like Mode 1, but Mode 2 is slightly better for image quality.
3. The flash has a tendency to blow highlights. I don't know what to recommend on this one.
4. Anything above ISO 200 is a noisy mess to my eyes.
5. Set the AF to "Center".
6. Spot metering works pretty well, as you want to expose based on what is in focus most likely.
Now, there are some things that I liked about the camera - the video mode, in widescreen, is excellent. The OIS works while in video mode, as does the optical zoom.
As for the housing, lube the o-ring just a little (till it's glossy, no more), install it and test the housing in a tub or sink. After that, put the camera and a desiccant sachet in and get to shooting. I never opened the housing outside of the air conditioned room to prevent fogging - not once did the housing fog! I had mine down to 138fsw without issue.