Yes, anytime you change the depth, the underlying terrain is changed to Grass (01). It does not mater what the original terrain was -- Deep Ocean, Farm, Forest, etc. -- it will turn to Grass when you change the terrain from land to water, water to land, or the depth of the water. Don't know if it is a bug or a new "feature" but it does make it more difficult if you have your terrain types set and need to make a change to the land/water.
And watch out for the Auto-Save feature! It saves whether the box is checked or not and it could overwrite your good terrain while experimenting with different settings. When you get a look you like, save and backup your files.