packrat-
I haven't tested my Nautilus radio, but assume the range on the water is what any VHF radio would be in the same position, i.e. line of sight. And that's not much, even with a 6 watt handheld radio, six feet above sea level (i.e. held in the cockpit) your limit is quickly going to be less than six miles, stopped by the horizon, unless you're working an elevated antenna.
For a lower power radio, even one watt, given the lack of background noise and interference at sea, you should be able to get similar range. More of a limit on the physics of the situation, than on the equipment. I think it is more intended to be used as "Hey, genius, we're five hundred yards aft of you, look this way!" than for longer range, really.
denis-
There is an alternative kludge which is not totally inelegant. You can buy a under-sink water filter housing, $10-15 online and twice that price in hardware stores in the US. This is a canister about a foot long and 3" wide made of plastic (search again for clear) with a screw-in top. Usually, they have two threaded openings in the top, for water lines in and out, and most important, a pressure relief button. But if you look around (Amazon again) you can get them with NO pressure relief button and just the two threaded holes, which can be plugged or epoxy filled. So for $15 plus some epoxy or bolts, you have a pressure-resistant container which is designed to keep water in against 175psi. That translates into beyond recreational scuba depth. I'd guess that the same simple o-ring seal would keep pressure OUT, meaning that you could take one of these, drop in a small water resistant VHF, and dive with it. On the surface, if you needed the radio, just open the container, take it out, and use it. The water-resistance should be sufficient on the surface that way, and the clear filter case good insurance against a leaky seal.
Not as small as a Lifeline, but using a conventional radio (check dimensions!) and a lot cheaper.
FWIW.