If the lower part of the river is all in a canyon I suspect the river elevation is lower than the "normal" elevation.
Edit:
I tried 4 different variant on completely flat terrain (river flowing from south to north), and they all were as expected:
- Aqueduct: A wacky case where a river flows in the air and then drops 3 Z levels (with trees growing under the river...) down to the level of the normal terrain. This is essentially the bottom one in my previous post.
- 3 tile baseline: the first one posted. Terrain and river raised 3 Z levels on the last embark line and the line just south of that. Again, the water dropped 3 levels to the plain below.
- 1 tile baseline: Only the tiles of the elevated river had the ground elevated as well (providing some additional plains level terrain to each side. Water dropped 3 levels here as well, although there was a little spill to the sides (but shouldn't be enough to cause flooding, as it should evaporate).
- 1 Z level: The previous one, but just a single level elevation difference. Didn't seem to produce mist, though, but no water spill either.
In all the cases the river was adjusted to go from x = 20 to X = 29 through all the river embark tiles and the tiles to the north and south of the embark to ensure a straight course.
Note that in all the non aquifer cases you'd have to do some digging on at least one side to reach the water fall from the plain as there's a little canyon effect as the waterfall drops abruptly, while the terrain drops gradually.