Light reach was done by tweaking the lue to a high number in sunColorCenterArea under globalLight. You can probably also check out flareColorGroups to address fire problem. Not sure if I ever modified it though.
I vaguely remember having to tweak the bloom because of the over exposed fires at night. It might have been fx firelight or something similar in the colors group in each env file.
Yeah, that should be good. I did edit the translucency of trees, but it's very minor and hardly noticeable. I also edited ambient occlusion (m_ssao? I can't remember the name).
It doesn't matter which bundle AFAIK. Make sure to rename the mod's env files before adding the vanilla files because you will revert back after adding the original water values.
When you are in W3Edit, just right click over any of the directories and click "add file" or something similar. A file browser will pop up with all the games files without having to extract the entire game.