One thing that's been bugging me is that there doesn't seem to be any way to raise the level of water or lava - particularly lava, since it's usually near the bottom of the map. It would be nice if there was a way to do that.
We should be able to control water level at the very least. We also need some kind of physics system for liquids, and a fan block could help make the lava rise to the top of the volcano, and then fall.
When it comes to the griefing using water, that would be easily fixed with a sponge block. Using a sort of manual water placement thing, in fact, would do a good job of reversing griefing done by sponge blocks.